Federal Corporate Taxation

by Abrams, Howard E.; Doernberg, Richard L.

• ISBN13: 9781587789953
• ISBN10: 1587789957
• Edition: 6th
• Format: Paperback
• Copyright: 2007-11-15
• Publisher: West Group

Summary

Find complete, updated coverage of the recent changes in corporate taxation: the debt/equity limitations "non-qualified preferred stock" in corporate formations and reorganizations; anti-abuse redemption provisions covering stock options and sales between related corporations; Anti-Morris Trust changes to tax-free spin-offs; elective classification "check-the-box" regulations; liberalization of Subchapter S shareholder restrictions; and changes to the timing of Subchapter S distributions.

Table of Contents

Preface	p. iii
The Corporate Double Tax	p. 1
Introduction and History	p. 1
Revenue Effects	p. 3
The Incidence of the Corporate Tax	p. 3
Integrating the Corporate and Individual Income Taxes	p. 7
Forming a Corporation	p. 17
Introduction	p. 17
Section 351: The Basics	p. 18
A Section 351 Roadmap	p. 20
"Property" Requirement	p. 22
What Constitutes a "Transfer"	p. 24
"Stock" Requirement	p. 25
Boot	p. 25
Assumption of liabilities	p. 26
The definition of "stock"	p. 32
Debt instruments	p. 34
Transferor's basis	p. 35
Treatment of the transferee	p. 38
"Control" Requirement	p. 43
The "Control" Group	p. 45
"Immediately After"	p. 46
The Relationship of Section 351 to Other Provisions and Legal Doctrines	p. 49
Section 351 vs. Sale	p. 49
Assignment of Income	p. 51
Business Purpose	p. 53
Tax Benefit Rule	p. 53
The Corporation as a Taxable Entity	p. 55
Corporate Tax Rates and Base	p. 55
Associations Taxable as Corporations	p. 59
Ignoring the Corporation: Dummy Corporations	p. 62
Ignoring the Corporation: Reallocation of Income and Related Issues	p. 64
The Passive Loss Limitations	p. 72
A Corporation's Capital Structure	p. 73
Cash and Property Distributions	p. 82
Introduction	p. 82
Earnings and Profits	p. 85
Relief From Dividends	p. 91
Treatment of the Distributing Corporation	p. 95
Effect of Property Distributions on Earnings and Profits	p. 102
Treatment of Shareholders	p. 104
Constructive Dividends	p. 105
Constructive Dividends and Corporate Shareholders	p. 111
"Fast pay" or "Stepped-down preferred" stock	p. 113
Redemptions	p. 116
Introduction	p. 116
Redemptions Taxed as Exchanges	p. 119
Complete Terminations	p. 119
Substantially Disproportionate Redemptions	p. 123
Redemptions Not Essentially Equivalent to a Dividend	p. 126
Partial Liquidations	p. 129
Redemptions to Pay Death Taxes	p. 132
Redemptions Taxed as Distributions	p. 133
Corporate-Level Taxation of Redemptions	p. 135
Redemptions Related to Other Transactions	p. 138
Redemptions for More or Less Than Fair Market Value	p. 143
Redemption Premiums	p. 143
Stock Surrenders	p. 145
Redemptions Through Related Corporations	p. 150
Stock Dividends	p. 157
Overview and History	p. 157
The General Rule of [section] 305(a)	p. 159
Exceptions to the General Rule Under [section] 305(b)	p. 160
Deemed Distributions Under [section] 305(c)	p. 166
Poison Pills	p. 168
Tainted Stock	p. 170
The Preferred Stock Bailout	p. 170
Definition of [section] 306 Stock	p. 171
Disposition of [section] 306 Stock	p. 174
Liquidations	p. 179
Introduction	p. 179
Section 331 Liquidations	p. 181
Treatment of the Shareholders	p. 181
Treatment of the Liquidating Distribution	p. 183
The Corporate Triple Tax	p. 191
Subsidiary Liquidations	p. 193
Treatment of the Parent-Corporation	p. 193
Treatment of the Subsidiary-Corporation	p. 195
Carryover of Tax Attributes	p. 197
Taxable Acquisitions	p. 199
Asset Purchases	p. 199
Stock Purchases	p. 202
Section 338 Elections	p. 203
Qualified Stock Purchases	p. 205
Election	p. 205
Operation of [section] 338	p. 205
Adjustments for Liabilities	p. 208
Allocation of Basis	p. 208
Consistency Requirements and Deemed Elections	p. 208
Acquisition of a Subsidiary From a Consolidated Group	p. 210
Expenses in Connection with an Acquisition	p. 211
Corporate Acquisitions and the Use of Debt	p. 212
Stock Acquisitions out of Retained Earnings	p. 212
Debt Financed Stock Acquisitions and Leveraged Buyouts	p. 212
Risks of Excessive Corporate Debt	p. 214
Reorganizations	p. 217
Introduction	p. 217
Amalgamating Reorganizations: Definitions	p. 219
"A" Reorganizations	p. 219
"B" Reorganizations	p. 226
"C" Reorganizations	p. 229
Nondivisive "D" Reorganizations	p. 232
Parent/Subsidiary Combinations	p. 236
Multi-Step Reorganizations	p. 240
"G" Reorganizations	p. 242
The Status of Creditors in a Reorganization	p. 246
A Retrospective on the Rules of [section] 368	p. 247
Amalgamating Reorganizations: Taxation	p. 249
Corporate-Level Taxation	p. 249
Shareholder-Level Taxation	p. 253
A Note on "Securities"	p. 260
Divisive Reorganizations	p. 262
Basic Requirements	p. 262
Taxation of Successful and Failed Divisions	p. 272
Divisive Reorganizations and Transfers of Control	p. 273
Alternatives to [section] 355	p. 279
One-Party Reorganizations	p. 281
Combining Tax Attributes	p. 285
Introduction	p. 285
Section 381	p. 286
Section 382	p. 287
Ownership Changes	p. 289
Constructive Ownership	p. 290
Preferred Stock	p. 290
Options	p. 291
Continuity of Business	p. 291
Corporate Value	p. 291
Built-in Gain and Built-in Losses	p. 292
Section 383	p. 292
Section 384	p. 293
Section 269	p. 294
Affiliated Corporations	p. 296
Eligibility for Filing	p. 297
Election to File a Consolidated Return and Other Accounting Considerations	p. 297
Computation of a Consolidated Return: In General	p. 298
Computation of a Consolidated Return: Intercompany Transactions	p. 298
Computation of a Consolidated Return: Intercompany Distributions	p. 300
Investment Basis Accounts and Excess Loss Accounts	p. 300
Limitations on Consolidated Reporting	p. 301
Penalty Provisions	p. 304
Introduction	p. 304
Accumulated Earnings Tax: Overview	p. 305
Accumulated Earnings Tax: Unreasonable Accumulations	p. 306
Accumulated Earnings Tax: Matching Earnings and Reasonable Needs	p. 308
Accumulated Earnings Tax: Burden of Proof	p. 309
Accumulated Earnings Tax: Computation of the Accumulated Earnings Tax	p. 310
Personal Holding Company Tax: Overview	p. 311
Personal Holding Company Tax: Stock Ownership Test	p. 312
Personal Holding Company Tax: Income Test	p. 312
Adjusted Ordinary Gross Income	p. 312
Personal Holding Company Income	p. 313
Personal Holding Company Tax: Computation	p. 316
S Corporations	p. 318
Introduction	p. 318
Qualification and Election	p. 319
One Class of Stock	p. 321
Formation	p. 324
Pass-Thru of Corporate Income and Deduction	p. 324
Shareholder Debt and Equity Basis; Loss Limitations	p. 327
Debt and Equity Basis	p. 327
At-Risk Rules and Passive Loss Limitations	p. 332
Pre-Contribution Appreciation and Related Problems	p. 334
Family Ownership and Section 1366(e)	p. 334
Nonliquidating Distributions	p. 335
Dispositions of Shares and Liquidating Distributions	p. 339
Disposition of Stock Not in Redemption	p. 339
Redemptions of Stock	p. 341
Liquidating Distributions	p. 342
Sales of Stock to a Corporate Purchaser	p. 342
Qualified Subchapter S Subsidiaries	p. 344
Transition Issues	p. 346
From C Corporation to S Corporation	p. 346
From S Corporation to C Corporation	p. 355
Table of Cases	p. 359
Index	p. 365
Table of Contents provided by Ingram. All Rights Reserved.