Taxation of liquidating
Taxation of liquidating - dating at plentyoffish com
The liquidation of T is a liquidation to which 453(h) applies and the liquidations of Y and Z into T are liquidations to which 332 applies.
distributed a 60% interest in Whiteacre to A, a 20% interest in Whiteacre to B, and a 20% interest in Whiteacre to C. also were distributed pro rata among X Co.'s shareholders.
purchased a Whiteacre (unimproved land) in 1990 at a cost of ,000. was liquidated and distributed its assets among its three shareholders. Since C owned only 20% of X Co.'s outstanding stock, C is not a related person to X Co. To be a related person, C would have had to have actual and constructive ownership of stock of X Co.
As noted in , Whiteacre is not disqualified property.
Thirteen months after the contribution in 2003 between A and X Co. Since A had a basis of 0,000 in her 80 shares of X Co.'s stock, she recognized a loss of ,000 on X Co.'s liquidation.
(Note that 267 does not prevent A from deducting that loss because that provision does not apply to a loss recognized from a distribution received pursuant to the complete liquidation of a corporation.) As to X Co.'s recognition of loss on distributing Whiteacre to B, 336(d)(1) does not apply to prevent recognition of X Co.'s loss because Whiteacre was not distributed by X Co. Therefore, unless 336(d)(2) applies, A's transfer of Whiteacre to X Co.
: A owns 150 shares of the only class of stock of X Co. T sells the stock of X to C for an installment obligation.
A purchased 50 shares in 1997 at a cost of ,000, 50 shares in 1998 at a cost of ,000, and 50 shares in 1999 at a cost of ,000. makes a series of distributions to its shareholders in redemption of all of its outstanding stock. Y sells all of its assets to D for an installment obligation. The B, C, and D installment obligations bear adequate stated interest and meet the requirements of 453.
were distributed among its three shareholders in such manner as to make the totality of its distributions pro rata.
, except that 100% of Whiteacre was distributed to C and the remaining assets of X Co.
constituting more than 50% of the value of X Co.'s outstanding stock ( 267(b)(2)).
While Whiteacre was not distributed pro rata among X Co.'s shareholders, it was not distributed to a related person (within the meaning of 267).
A receives ,000 in 2002, ,000 in 2003, and ,000 in 2004. In June 2003, Y and Z completely liquidate, distributing their respective assets (the D installment obligation and cash) to T.