If a stockholder were a 100% shareholder and the stock was a value stock,
after the redemption, the stockholder owns less than 50% of the total combined voting power. The
reason behind the stockholder choose to pull out at that time, could be that the sto
The tax implications of a stock redemption have various implications
to both the stockholder and corporation depending on how the redemption is distributed. In the case of a stockholder
assuming the stock is redeemed for anything other than a distribution
Stock redemption tax implications for a stockholder:
Stock redemption is the sale of stock back to the original corporation by the shareholder
(CSU-Global, 2016b). In a stock redemption the shareholder may receive cash or property back
from the corporatio
Shareholder stock redemption is where a shareholder sells stock back
to the corporation that they bought it from. When this is done it is treated like a dividend or a sale for
taxation. If their equity in the corporation is significant or total, then its
If the tax code states redeeming stocks is taxable, why are corporations not held to that standard?
Thu Sep 22, 2016 at 6:09 pm
Jamie, I am not aware of a tax code that states a stock redemption is a taxable event for the
corporation redeeming its own sto
most of these examples can get pretty complicated.
However, your example is pretty simple. There seems to be little doubt about how and why this would
be treated as a stock redemption. Nonetheless, its nice to read something that I dont have to re-read
fi
after reading this over and over again,
its hopefully beginning to sink in. This area between the extremes is definitely the hard part.
However, the substantially disproportionate test is becoming a little clearer. This distribution is
substantially propo
Stock redemption tax implications for a corporation:
A corporation will recognize a capital gain or loss on a transaction that is treated as a stock
redemption (CSU-Global, 2016b). However, losses on non-liquidating distributions of property
are treated a
Stockholder impact:
Generally, in the cases when stockholder redeems his/her stock without completely or substantially
diminishing his/her ownership interest in the company, the transaction will be treated as a dividend
distribution. The preference though
If firms follow generally accepted accounting principles
(GAAP), then the accounting treatment for share repurchases depends on the firm's intended purpose
for the repurchased shares. Treasury stock holdings are viewed as temporary and treasury stock
tran
solid assessment of the financial and economic environment
should be carried out prior to the process. Financial conditions can significantly alter values of assets
and create alternatives that may not look so good at the time. In terms of taxation, it is
Compare and contrast the different tax implications that a stock redemption has on a stockholder vs.
the tax implications that the redemption has on the corporation. If possible, consider finding examples
from current events (within the past 5 years) to h
Sun Sep 25, 2016 at 2:16 pm
Thank you for giving the example for the stockholder tax implications. This made me think about
keeping good records for your stock cost basis. If you don't keep good records but have been buying
the stock a few at a time you s
Tax implication that a stock redemption has on the
corporation:
For corporate shareholder, if the stock redemption transaction is treated as a dividend distribution, the
corporate has dividends deduction treatment. Dividends deduction will reduce the tax
to the issuing corporation for cash or for other property. This transaction has an
effect of a dividend distribution rather than a sale or exchange.
The advantage of the stock redemption is that when taking cash out of a
corporation in exchange for stock
A stock redemption occurs when a corporation acquires its stock from a
shareholder in exchange for property (including cash), whether the stock
acquired by the corporation is canceled, retired, or held as treasury stock (Sec. 317(b). A redemption
may be t
Tax implication that a stock redemption has on a stockholder:
Stock redemption is the process where a shareholder sells stock back to the issuing corporation for
cash or other property, the transaction can have the effect of a dividend distribution rather
In the event of a complete termination redemption where the shareholder no longer
has interest in the corporation two conditions must be met. The first condition states that the former
shareholder cannot have an interest in the corporation other than as a
