Corporate Tax Checklists

8/17/2019 Corporate Tax Checklists

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I. The Step Transaction Doctrine (apply all three tests on exam)1. Binding Commitment Test : A binding contract or commitment to engage in step two (or three) that is

in existence at the time of step one almost certainly will result in a collapsing of the steps into a singletransactiona. Focuses heavily on whether there was a contract set in place

b. asy to beat!. Mutual Interdependence Test : If step one and the subse"uent step (or steps) are so interdependent that

the legal relationship created by the first step would have been pointless without completion of theseries# then there is only one stepa. $ould you have stopped after step one and been happy%

&. Ultimate Result Test : 'eparate steps may be combined if they were prearranged components of asingle transaction in which the parties intended from the outset to reach a particular result.a. id you envision all the steps that too place and did they end up ta ing place how you imagined

they would%*. +esults: if it is all part of the same transaction you can re order the steps

II. ,ax octrines1. -usiness urpose!. 'ham ,ransaction

&. conomic 'ubstance: tax benefits are denied for transactions that actually occur but do not result in ameaningful change in a taxpayer/s economic position apart from a reduction in federal income taxed.

II. Check the box1. 00could be "uestions harder for issue spotting than other business tax

I . Incorporations and other Section !"1 Transactions1. Find transferors of 2 propert# 3 (may be a group)

a. 2 roperty3 does not include (1) services# (!) indebtedness of the transferee corporation which isnot evidenced by a security# or (&) interest on indebtedness of the transferee corporation whichaccrued on or after the beginning of the transferor/s holding period for the debt

b. $ash# intangibles# movable property# and realty are all considered property!. $hec for 2 control 3 by property transferors under &45(c)

a. 2$ontrol3: ownership of stoc possessing at least 567 of the total combined voting power of allclasses of stoc entitled to vote A8 at least 567 of the total number of shares of all other classesof stoc of the corporation. &45(c).i. $ount the shares already owned by the transferors

b. $onsider whether there is an 2 accommodation trans$eror 3 problemi. Kamborian : 9here a trust contributed a small amount of cash to give a transferor group 567

control# court found that the trust was not truly part of the transferor group.ii. ,he transfers must have an economic connection you can/t ma e a single transaction out of

otherwise unrelated transfers can/t be of 2relatively small value3iii. +ev. roc. ;& (safe harbor): If the F 167 of the F


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&. $onsider whether &C (c) applies to create gain (negative basis problem# basically on highlyencumbered properties)

*. $ompute gain?loss realiDed by each transferor of property under 1661a. Eain F


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these assumed liabilities# the transferor would then sell the stoc addeduct the capital loss against gains from other business activities.

ffectively# duplicating and accelerating a deduction for a contingentlosses see basis

ii. &C5(h)(!): the basis;reduction re"uirement does not apply where:1. ,he trade of business with which the liability is associated is

transferred to the corporation as part of the exchangeB or

!. where substantially all of the assets with which the liability isassociated are transferred to the person assuming the liability as partof the exchange

b. If the transaction does not fall within &C1# realiDed gains and losses generally are recogniDed# under general tax principles.

4. $orporation: 8o gain or loss on the issuance of stoc # under 16&! and +eg 1.16&!;1(a)# regardless ofwhether or not the transaction is governed by 'ection &C1 .

. -ases of stoc received by trans$erors and assets received by corporation :a. If the transaction falls within &C1# property transferors generally have exchanged bases in their

stoc . &C5B corporation ta es transferred bases in the property. &4!.i. Absence of -oot:

A. ,ransferor: 'ubstituted basis (same as that of the property exchanged). &C5(a).-. $orporation: carryover basis. &4!(a).

ii. 9ith -ootA. ,ransferor: 'ubstituted F


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b. If the transaction does not fall within &C1# bases will be fair mar et value (cost) bases.5. Molding eriods:

a. If the transaction falls within &C1# property transferors receive tac ed holding periods with respectto capital and "uasi;capital assets transferred. 1!!&(1). Assets transferred to the corporation receivetac ed holding periods. 1!!&(!)

b. If the transaction does not fall within &C1# holding periods start anew.N. Avoidance

a. Incentive: may want to avoid "ualification to accelerate recognition of a loss or to recogniDe gainon an asset and step;up its basis for depreciation in the hands of the corporation.

b. ,echni"ues: give preferred stoc rather than commoni. ,reating as a sale will li ely not wor . Burr Oa!s (taxpayer tries to 2sell3 land to corporation#

court reclassified the debt as stoc and held that A recogniDes no gain under &C1). 'ee debt v.e"uity

. Capital Structure o$ a Corporation1. ,ax Advantages of ebt

a. Interest deduction:b. +epayment of principal: tax free return of capital to the lender.

%. ,ax advances of e"uity

a. &C1 non;recognitionb. $orporate shareholders receive dividends received deduction. !*&.!. istinguishing -etween ebt and "uity. O &5C.

a. &sk' Does the in(estment) anal#*ed in terms o$ economic realit#) constitutes risk capital or astrict debtor+creditor relationship (ie,ing the transaction as i$ it ,ere ,ith an outside lender."criptomatic .

b. 'ection &5C(b) lists five factors.i. Form i.e. whether the instrument pays a fixed rate of interest and is evidenced by a written

unconditional promise to pay a sum certain on demand or on a specific date in return for anade"uate consideration.

A. ebt: an instrument should have the formal indicia of a debt obligation e.g. anunconditional promise to pay# specific terms# and a fixed rate of interest payable in allevents

-. Mybrid instruments: if it has voting rights or ma e interest payments contingent onearnings# li ely e"uity

ii. 'ubordination i.e. whether the debt under scrutiny is subordinated to or has preference overany other indebtedness of the corporation

A. 'ubordination of shareholder debt to claims of outside lenders and trade creditors isregarded as evidence of e"uity.

iii. ,he debt?e"uity ration of the corporation. &5C is silent to how the ration is computed or when itis excessive but courts loo at this

iv. $onvertibility i.e. whether the interest is convertible into stoc v. roportionality i.e. the relationship between the holdings of stoc in the corporation and

holdings of the debt under scrutiny.A. 2,hinly capitaliDed3: a corporation with a high debt?e"uity ration.


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a. $ash received by the shareholder - F


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. Reattribution : under &15(a)(C)# the constructive ownership interest that result fromattribution may themselves be reattributed to another.

. 2ptions : stoc is attributed to any person who holds an option to ac"uire that stoc .&15(a)(*).

1) 'toc that the holder could ac"uire by the exercise of an option# warrant#convertible debenture# or similar right is attributed to the holder.

!) Appears that when the right to exercise an option is subJect to contingencies not

within the control of the option holder# the option generally will not supportattribution.ii. $aution: highly mechanical rule

A. ,hey only apply if the code says they apply# and-. 'toc is attributed to a shareholder only from the individuals or entities specified in

'ection &15$. ,here are other stoc attribution rules that slightly differ

. T U $A8 8HT A,,+I-U, I, 8 ,M + +' 8 8 , ,9I$ b. ,he number of shares outstanding after the redemption will be less than before the redemption

because the shares redeemed are no longer outstanding&. 9as this a redemption from a non;corporate shareholder in partial li"uidation of the corporation%*. If no# was this a complete termination of the shareholder/s interest in the corporation% &6!(b)(&).

a. Attribution of family owned sales can ma e this seemingly impossiblei. 9aiver of family attribution &6!(c)(!)(A ): if re"uirements met# family attribution ( &15(a)(1))

will not apply in determining whether there has been a complete termination of interestA. Immediately after the redemption distribution# the shareholder in "uestion (the

distributee) retains no interest in the corporation other than as a creditor . ,hedistributee cannot even remain an officer# director# or employee. &6!(c)(!)(A)(i) .

1) ynch : blac P white definition of interest taxpayer must completely sever allnon;creditor interest in the corporation (including independent contractors getting

paid small amounts) @loo out for e"uity;li e debt

!) #urst : creditor interests held to be a complete termination even though they hada pretty large amount of control# ey is that there is a formulistic loo and foundthat the it was still a creditor/s interest and that was the most important thing

-. ,he distributee does not ac"uire any such interest (other than by be"uest or inheritance)within ten years from the date of the distribution. If this provision is violated# the waiverwill be invalidated retroactively. &6!(c)(!)(A)(ii) . A special statue of limitation runs foron year from the sate the shareholder notifies the I+' of the receipt of the stoc .

$. ,he distributee files an agreement with the I+' to notify it of any prohibited ac"uisitiondescribed and to maintain necessary records. &6!(c)(!)(A)(iii) .

b. 9aiver of family attribution by entitiesC. If no# was this a 2substantially disproportionate3 redemption% &6!(b)(!)

a. After redemption# the shareholder must have less than C67 of the total voting power of all classesof the corporation/s stoc # including voting preferred.i. Immediately after does 8 , re"uire a change# you Just need less than C67

b. Immediately after the redemption# the voting power the shareholder has must be less than 567 ofthe voting power the shareholder had before the redemption (most importantly)

c. Immediately after the redemption# the common stoc the shareholder has must be less than 567 ofthe common stoc the shareholder had before the redemption.

4. If no# was this 2not essentially e"uivalent to a dividend#3 a fact;sensitive test% &6!(b)(1) .a. Hast resort if the redemption does not "ualify under other paragraphs of &6!(b)


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b. Da$is : 2to "ualify for preferred treatment under &6!(b)(1) # a redemption must result in ameaningful reduction of the shareholder/s proportionate interest in the corporation.3i. oesnSt matter that there is a legitimate business purpose

A. nly as if it is a sale or something elseii. 9here a sole shareholder (actually or constructively) has part of his or her stoc redeemed# that

will always be taxed as a section &61 distribution rather than an exchange.iii. If a shareholder owns only non$oting preferred stoc! of a corporation (even after application of

constructive ownership rules)# and the stoc is not section &64 stoc # the redemption of a part ofthat stoc generally will "ualify under section &6!(b)(1) # although it does not otherwise "ualifyunder section &6!(b).

c. +ev. +ul. C;C6! : C to C6 meaningful b?c voting rights are not deadloc edi. indicia of stoc ownership that are important to determining a meaningful reduction

A. 8ot mechanical?not how much? doesnSt have to be significant matters what actuallychanged and the circumstances the amount of drop doesnSt matter if you still havecontrol

-. ,he right to vote$. ,he right to participate in dividends

1) 9hen you donSt have control# even small amounts usually past muster !) ,here is one case that found a really small amount wasnSt enough.

. ,he right to share in net assets on li"uidationd. Family Mostility

i. Creone : there is a possibility of a family hostility exception if is a reduction# ta ing account ofthe attribution rules i.e. for a sole shareholder it is impossible

A. 8eed unrelated shareholders with the family attribution rules preventing exchangetreatment

e. %enz : @always consider step;transaction doctrine in these cases. If the answer to any of "uestions &;4 is yes# then the redemption is taxed as an exchange. ,he

shareholder will have capital gain in the amount of the difference between the amount distributed and

the shareholder/s basis in those shares.5. If the answer to all of "uestions &;4 is no# then the transaction is taxed as a section &61 distribution.Apply section &61 to determine the dividend amount (ordinary dividend to the extent of the redeemingcorporation/s P ).

II. Apply O &6C to 'toc ividends1. 9as there an actual or constructive stoc distribution with respect to stoc % (If no# section &6C does not

apply).!. &6C(a) excludes tax treatment

a. rimarily pro rata distribution of common stoc to common stoc holder. "ee &isner . b. ro rata distributions of preferred stoc to common stoc holders# where common stoc was the

only outstanding class of stoc prior to the distribution.c. -asis: basis in the old stoc is generally allocated among the old stoc and the stoc newly

received# in proportion to the F


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a. ut rights (allowed to redeem after for prearranged price): taxed under &61# b?c 2after thedeclaration thereof3i. ven if the right can/t be exercised immediately

ii.


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a. ,he limitation on loss applies only if a principal purpose of the ac"uisition of the property by thecorporation was to create a loss for the corporation in the subse"uent li"uidation. &&4(d)(!)(-)(i)(II) .i. roperty ac"uired by the corporation during the two years preceding the adoption of the plan of

li"uidation will be treated as ac"uired for the prohibited purpose except as provided byregulation. &&4(d)(!)(-)(ii) .

b. &&4(d)(!) special rule for certain property ac"uired in certain carryover basis transactions

i. nly loss economically accruing after the transfer of the property to the corporation may bedeductedB pre;contribution# or built;in# loss is disallowed by reducing the basis of thecontributed property by the amount of the built;in loss at the time of the contribution

ii. -asic safe harbor have to ac"uire more than ! years before the plan for complete li"uidationL. Hi"uidation of a subsidiary

1. Is it a controlled subsidiary% 567 of .. (see 1C6*(a)(!)!. 'ubsidiary/s -asis: Under &&*(b)(1) the bases of the subsidiary/s assets carry over to the parent

corporation# preserving the unrealiDed appreciation that would otherwise have been taxable to thesubsidiary.

&. arent/s -asis: the parent/s basis in the subsidiary/s stoc disappears along with that sotc and the parent/s investment gain or los permanently escapes tax conse"uences.

*. +emember: taxation to individuals is handled by &&1 or &&4LI. $omparison of taxable and non;taxable complete li"uidations

,ype of li"uidation Hi"uidating corporationstax conse"uences

'hareholders taxconse"uences

-asis +ules

,axable Eain realiDed isrecogniDedB losses may or may not be recogniDed.&&4.

Eain or loss realiDed isrecogniDed. &&1.

'hareholders ta e F


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a. ,he purchasing corporation may ma e a &&5 election no later than the 1C th day of the ninth month beginning after the month containing the date on which 567 control was obtained. &&5(g)(1)# (h)(!) .

*. ,ax conse"uences to ,arget of a section &&5 electiona. If elected: its new subsidiary (,) is treated as having sold at fair mar et value all of its assets in a

single transaction occurring at the close of the date on which the re"uisite 567 control wasac"uired &&5(a)(1). ,his deemed sale is subJect to complete recognition on the final tax return of

the 2old3 target corporation. b. ,arget still owns the assets# so it is treated as a new corporation that purchased all of the assets asof the beginning of the following day

c. isadvantages: results in immediate recognition of gains (and losses) by the subsidiary corporationi. $ompany may want to defer any gain inherent in its assets.

d. Advantages: higher asset basis# which will provide tax savings over a period of time# as assets aredepreciated or sold.i. 9hen , has net operating loss carryovers that will offset the gain recogniDed on ,/s deemed

asset sale# or where , is a subsidiary and the parties also Jointly ma e a &&5(h)(16) electinoC. $alculation and allocation of ,arget/s new asset basis

a. Aggregate asset basis the grossed;up basis of the purchasing corporation/s recently purchasedstoc G the basis of the purchasing corporation/s non;recently purchased stoc . &&5(b)(1).i. +ecently purchased: purchased by the purchasing corporation during the 1!;month ac"uisition

period.ii. 8on;recently purchased: all other stoc in the target corporation held by the purchasing

corporation on the ac"uisition date.iii. Erossed;up basis cost of stoc x (1667 ; 7 of non;recently purchased stoc )? 7 of recently

purchased stoc )4. O &&5(h)(16) lection

a. 8o gain or loss is recogniDed by the selling group# but rather# the subsidiary is considered to havesold its assets and distributed the proceeds to its selling shareholders# in li"uidation. ,he deemed

li"uidation generally will be protected by &&!. b. If seller accepted the liability: the election essentially allows the selling group to substitute gain on

a deemed sale of the target/s asset for the gain that would have been recogniDed on the sale of thetarget/s stoc . Unli e a sale of stoc # the deemed asset sale results in a step;up basis of the target/sassets. A basis step;up is valuable to the buyer# which should increase the purchase price. ,hus# itmay be more advantageous for the selling group to pa tax on the 2inside3 gain in the subsidiary/sassets rather than to be taxed on 2outside3 gain (he gain selling shareholders would have on thesale of the subsidiary/s stoc )

c. 'elling group could achieve virtually the same result by li"uidating the subsidiary tax;free an thenselling the target/s assets. In that case# the ac"uiring company would obtain a cost basis in the

assets it ac"uires# under 161!.. 4eneral Checklist $or alid Reorgani*ations

1. 000 xam "uestion: these are what the parties want to do# what is the best way to go about it%!. ,he transaction must "ualify as a reorganiDation under O &45.

a. 5&6 t#pe ; (stoc for assets) &45(a)(1)(A)i. 'tatutory merger?$onsolidation% A transaction effectuated under a (state?federal?foreign) merger

statute must have the result that:A.


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-. ne corporation ac"uires the assets of the target corporation by operation of thecorporate law merger statute and then , li"uidates

$. ,he target corporation ceases to exist. +ev. +ule !666;C?+eg# 1.&45;!(b)(1)(ii) .1) $annot do a disregarded entity merger where an HH$ goes to the ac"uirer and the

target corporation still exists target can go into the disregarded entityii. 'ubsidiary used in a ,ype A

A. +easons: allows to protect its assets from creditors of ,# approval by the ac"uiringcorporation/s maJority shareholders is easier because only approval of the parentcorporation/s board is re"uired.

b. 5C6 t#pe voting stoc for assets &45(a)(1)($) effectively intentioned to accommodatetransactions that are in effect mergers but which fail to meet the statutory re"uirements of 2A3@Wnon;statutory merger 2de facto merger3i. 9as 2substantially3 all of the properties ac"uired% @Fact sensitive

A. +ev. roc. ;& 2'afe Marbor3 @789:8 test : where there is a transfer of assetsrepresenting at least N67 of the F


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b) -ecause most businesses have substantial liabilities# any boot will usuallydis"ualify a putative 2$3

iv. ,ax $onse"uences and -asis +ulesA. ,arget transfers all of its assets to the ac"uiring corporation in return for temporary

stoc holdings in the ac"uire. ,he target then li"uidates# distributing the stoc and anyremaining assets to its shareholders# who thereby become shareholders of the ac"uirer.

-. Ac"uirer:1) -asis: determined under &4!(b). i.e. ,ransferred basis%

$. ,arget:1) &C*(a) applies to shelter realiDed gain or loss to target shareholders on this

exchange# except that section &C4(a) applies to any target shareholder that received boot.

!) Under &C4(a)# gain realiDed by a target shareholder is recogniDed to thatshareholder to the extent of the boot he received.

&) -asis: ta es basis in the new shares that is the same as the old share basis# adJustedupward for gain recogniDed and downward for liability relief and boot received.&C5(a)(1).

c. 5B6 T#pe voting stoc for stoc &45(a)(1)(-) the ac"uiring corporation swaps its $oting stoc! with target shareholders for enough stoc of the target corporation as to have 2control3 of itafter the transaction. ,hus# after reorganiDation is complete# the target is at least an 567 subsidiaryof the ac"uiring corporation# and the former target shareholders are new shareholders of theac"uiring corporation. @deals directly with the stoc holdersi. 2'olely for =oting 'toc 3 +e"uirement: re"uires that the voting stoc be the sole ac"uisitive

consideration used to ac"uire the target stoc @very little flexibility .A. ,he use of any non;voting stoc as consideration for the target stoc will spoil a -

reorganiDation-. ,he use of a mix of ac"uiring and parent corporation stoc # even if both types of stoc

have voting rights will fail.$. Xero -oot ,olerance xceptions

1) $ash or other property may be used in lieu of issuing fractional shares (arises because there the small companies stoc is worth such a small amount of the bigcompanies stoca) +ev. +ul. 44;&4C : uses a step transaction type analysis to say its two separate

transaction @strange a - then a sudo;redemption. @Administrativeexception

b) xamine continuity of proprietary interest to ma e sure that not too much cashis being paid out relatively.

!) Ac"uirer can assume the target/s reorganiDation expenses (not the target/s

shareholders)&) ptions or warrants are not held to violate the rule (happens when there is a poison

pill) the ac"uirer can give the target the same option?warrant rights. +eg. 1.&C4;&(b).

*) 8on;stoc ac"uisitions: if the target is struggling financially# the ac"uirer canac"uire the bonds in the interim period before close to give the target operatingcash. -een held to be o even though it loo s li e it would violate the steptransaction doctrine many times.

. efinition of voting stoc ii. ,he 2$ontrol3 G 2immediately after3 +e"uirement


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A. wnership of at least 567 of voting and 567 of all other stoc . &45(c).-. re;existing control does not violate the re"uirement (you could go from 517 to 5!7)

1) 2$reeping3 - reorganiDations allowed: where control is ac"uired in a series ofac"uisitionsa) 'tep;transaction doctrine ris #e$erly $* Commissioner : its enough to get a

full 567 amou# you are still at ris of the step transaction doctrine if youac"uire too close

iii. ,ax $onse"uences and -asis +ulesA. Ac"uirer: ac"uires the stoc of the target

1) ,a es a transferred basis in the stoc of the target corporation. &4!(b).-. ,arget: remains in existence as a subsidiary of the ac"uirer

1) &C* applies to shelter their realiDed gain from recognition. ach shareholder ta esas his basis in the ac"uirer the basis he ha in the stoc of the target corporationunder &C5.

d. 0or,ard Triangle Mergers &45(a)(!)( )i. ' must ac"uire 2substantially all3 of the properties of ,. @see 2$3 re"uirementY @subJect to

&l!horn Coal line of cases and the N6? 6 test# residual test# etc.ii. 8o stoc of ' may be used as consideration in the merger. Use of ' debt securities is not

prohibited.A. Himit on consideration-. -ecause the stoc in ' is not a controlling interest# if you received stoc in the sub that

is li e getting cash because it is Just economic interest# there is no proprietary interest because the parent controls the sub.

iii. ,he transaction must have "ualified as a 2A3 if , had merged directly into . @the transactionmust satisfy the Judicial continuity of interest re"uirement i.e. must ac"uire , using at leastC67 stoc

A.


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b. ,regory : you shouldnSt be able to do transactions Just for tax avoidance# you should have a real business purpose for the transaction

C. ,here must be continuit# o$ business enterprise @facts G circumstances @2A3 is most relevanta. Mas the parent corporation continued the target corporation/s historic business 2R use a significant

portion of ,/s historic business assets in a business% +eg. 1.&45;1(d) .i. Vnow it if we see it type of factual test

ii. .x. cannot sell assets for investment portfolio and then do a merger with an investment firm b?cyou Just recently ac"uirer the assets

4. ,here must be continuit# o$ proprietar# interest . e ulle $* "cofield . @ oesn/t want a disguised sale@most relevant to 2A3 reorganiDations . +eg.a. $ash# short term bonds# etc. not a retained interest

b. Are the & elements met%i. Qualitative is there a proprietary interest%

A. oes some of the consideration received by one or more of the shareholders of anac"uired corporation consist of $oting or non$oting stoc! @preferred stoc o of theac"uiring corporation% (or# in a triangular reorganiDation# of a corporation in control ofit)

1) o you have an interest in the company profiting% referred stoc holders do because there has to be profits to get their dividends.

!) ebt holders Just have an interest in the business being viablea) ebt instruments cannot constitute a proprietary interest.

&) ebt v. e"uity analysis relevantii. Quantitative how large does the sta e have to be%

A. oes some substantial part of the consideration paid by the ac"uiring corporation consistof its stoc or stoc of a corporation in control of it%

-. 2'ubstantial3 'afe Marbor: W*67 stoc would be sufficient @ +eg. 1.&45;1(e)(v) x. 1 ?dicta in .elson # although it is understood that > C67 stoc is safer under +ev roc ;& .

iii. ,emporal aspect @can/t funnel stoc bac to ac"uirer @cite: +ev. +ul. 1.&45;1(e)(i)A. id target shareholders sell sell stoc bac to the ac"uirer or an affiliate of the seller%1) If yes# then it fails the test and is a disguised sale unless the facts and

circumstances show that it is OK . I.e. a buy bac program-. id target shareholders sell stoc to an unrelated party# immediately or otherwise%

1) If yes# it is o you can sell all day long as long as its to unrelated people and youare taxed on that transaction

!) As long as you are not funnel shares to target# it is not a disguised salec. If no continuity of interest# there is a sale upon which gain or loss must be taxed

. 8 , be subJect to the step transaction doctrine5. ,ax $onse"uences of ,ransactions Qualifying as reorganiDations

a. Ac"uiring $orporationi. $arryover basis in the ac"uired net assets e"ual to the target/s historical tax basis# even when again is recogniDed by the target shareholders on any boot received

ii. Assumes a carryover basis in the stoc received from target shareholders e"ual to the targetshareholders/ basis# even when a gain is recogniDed by the target shareholders on any bootreceived

iii. - reorg: ta es a basis in the stoc e"ual to , 'M/s basis in the , stoc iv. 8o gain or loss on the exchange of the ac"uiroer/s own stoc for stoc of the target

b. ,arget 'hareholdersi. If no boot# &C*(a)(1) carryover basis


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ii. If boot# &C4(a)(1) boot is taxed# but only to the extent of the total realiDed gain on thetransaction. Hoss is not recogniDed in either instance.

iii. -asis: ta es basis in parent stoc e"ual to , 'M/s basis in the , stoc surrendered G gainrecogniDed boot received

c. ,arget ntityi. ,arget does not recogniDe a taxable gain on the transfer of assets to the ac"uirer.

N. principal code sections applicable to reorganiDations16.arty involved in the reorganiDation Applicable code sections

,arget shareholders OO &C*# &C4# &C5 for basis,arget $orporation OO &C # &41# &C5 for basisAc"uiring $orporation OO 16&!# &4!(b) for basis

arent of Ac"uiring $orporation OO 16&!#B ,reas. +eg. O 1.&C5;4 for basis

L=. ',U T1. Mow you treat things# i.e. property with built in losses# at each stage of the corporation

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Transcript of Corporate Tax Checklists