CHAPTER SEVEN

Other Corporate Issues

§ 7.1 Introduction 426

§ 7.2 Earnings and Profits 426

(a) Introduction 426

(b) Account Adjustment 426

(i) Prior Law 427

(ii) Bankruptcy Tax Act 428

(iii) Discharge of Indebtedness Income 428

(iv) Reduction of Deficit When Shareholder’s Interest Is Terminated 428

(c) Earnings and Profit Carryover 430

§ 7.3 Incorporation 430

(a) Introduction 430

(b) I.R.C. Section 351(d) 431

(c) I.R.C. Section 351(e) 432

(d) I.R.C. Section 351(g) 432

(e) I.R.C. Section 362(e) 432

§ 7.4 Liquidation 434

(a) Old I.R.C. Section 337 434

(b) Distribution to Certain Related Parties 435

(c) Examples 435

(d) Loss Reduction 435

(e) I.R.C. Section 332 436

(f) Proposed I.R.C. Section 336(e) Regulations 439

§ 7.5 I.R.C. Section 338 440

(a) Reasons for I.R.C. Section 338 440

(b) Applicability of I.R.C. Section 338 441

(c) “Qualified Stock Purchase” 442

(d) 12-Month Acquisition Period 442

(e) Impact of a Section 338(g) Election 443

(f) Consistency Rules 444

(g) Elective Recognition of Gain or Loss by Target Corporation: I.R.C. Section 338(h)(10) 446

(h) Regulatory Evolution 448

(i) Acquisition Dates after February 13, 1997, and before February 6, 2000 448

(ii) Acquisition Dates on or after January 6, 2000 449

(iii) Current Final Regulations 450

(iv) T.D. 9071 452

(i) Election Procedures 453

(j) Summary of I.R.C. Section 338 453

§ 7.6 Limited Liability Corporation 454

§ 7.7 Other Tax Considerations 454

(a) I.R.C. Section 385 454

(b) Notice 94-47 456

(c) Codification of Economic ...

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