Corporate Taxation (sjsu Bus 223c)

A. Does this purchase makes economic sense? Evaluate stock received vs. Sec. 1032: No g/l to or on providing stock for property. Sec. 355: No g/l on distribution of the company’s stock in its subsidiary to its shareholders, if not just a device for distributing E&P (transforms subsidiary into a brother/sister Corp.). Sec. 361: No g/l to or in reorg on the exchange of property for stock.

No g/l on distribution of property to s/h unless valued. Sec. 118: Revenues will not include efforts to capital. Sec. 1239: On the transfer of property between related (more than 50% of the value of stock, or close family members) celebrations, gain on depreciable property is normal income, because the customer will have A/B of FMV and take a depreciation deduction.

Otherwise, capital gain to transfer. Transfer to partnership from a partner with more than 50% collaboration interests – deficits disallowed, gains are normal income. General guideline: Gain or loss on all dispositions of assets is taxable unless exception (Sec. 80% ownership in or soon after transfer. Control: 80% owner of the voting stock and 80% owner of one another class of non-voting stock.

  • ► Mar 29 (3)
  • Always have the right insurance
  • Identify everything you need to help make the business work
  • Anticipated – planning on, waiting for inflation
  • You can make corrections if you flunk of money

Some intangibles may be services, not property (Rev. Rul. Ex: Contract to do architectural drawings is something, however the drawings themselves are property. No attribution of possession between family members. Attribution of possession within consolidated groups does exist. Tax planning: If 351 N/A because 80% ownership is not met, have transferor form a corp, put property or cash in to the core, then execute a “B” stock for stock reorg with the other company.

Still eventually ends up with gain at sale of stock, but that is deferred until sale. Leads to gain to get and corporation to the shareholder, so lease, or sale instead of contribution. If A/B greater than FMV, loss to both shareholder and company. FMV of appreciated property when given. Corp: Takes S/H’s low A/B in property (362) therefore large gain at sale. Sec. 356: When there is a boot present, that counts as gain.

A/B avoid gain with S/H write a promissory be aware to the core (Parachi 9th Circuit). Avoids or relieving liability. Liabilities include accounts payable. Liability wasn’t created merely to get cash out of the corporation (i.e. real business responsibility). Example: CEO uses or bank card to buy personal items.

Fix by holding out that debt or paying it off. If both 1 and 2 apply, 2 trumps. Sec. 354: No g/l in stock-for-stock exchange in a reorg. 2. Disregarded liabilities: Contingent environmental liabilities (Rev. Rul. 1. Sec. 362: Basis to or in property received in a 351 stock for property exchange is the carryover basis from transfers, plus any gain recognized by the transferor.