Corporate And Partnership Taxation

by Schwarz, Stephen; Lathrope, Daniel J.

• ISBN13: 9780314158864
• ISBN10: 0314158863
• Edition: 5th
• Format: Paperback
• Copyright: 2005-08-08
• Publisher: West Academic

Summary

Black Letter Outlines are designed to help a law student recognize and understand the basic principles and issues of law covered in a law school course. Black Letter Outlines can be used both as a study aid when preparing for classes and as a review of the subject matter when studying for an examination. Each Black Letter Outline is written by experienced law school professors who are recognized national authorities in the subject covered. Book jacket.

Table of Contents

Capsule Summary	1	(70)
Perspective	71	(6)
PART ONE: GENERAL CONSIDERATIONS
Introduction To Taxation of Business Organizations	77	(12)
Forms of Business Organizations	79	(1)
Sole Proprietorship	79	(1)
Corporation	79	(1)
Partnership	79	(1)
General Partnership	79	(1)
Limited Partnership	79	(1)
Limited Liability Partnership	79	(1)
Joint Venture	80	(1)
Limited Liability Company	80	(1)
Conceptual Taxation Models	80	(1)
Aggregate Concept	80	(1)
Entity Concept	80	(1)
Hybrid Concepts	80	(1)
Overview of Taxing Regimes Under the Code	81	(1)
Subchapter C	81	(1)
Subchapter K	81	(1)
Subchapter S	82	(1)
Specialized Tax Regimes	82	(1)
Influential Policies	82	(2)
The Double Tax	83	(1)
Rate Structure	83	(1)
Preferential Rates on Capital Gains and Qualified Dividends	84	(1)
Nonrecognition	84	(1)
Pervasive Judicial Doctrines	84	(5)
Substance Over Form	85	(1)
Step Transactions	85	(1)
The Binding Commitment Test	85	(1)
The End Result Test	86	(1)
The Interdependence Test	86	(1)
Business Purpose	86	(1)
Sham Transaction	87	(2)
Classification	89	(14)
Introduction	90	(1)
Impact of Classification	90	(1)
The Role of State Law	90	(1)
Principal Classification Issues	90	(1)
Existence of a Separate Entity	91	(3)
In General	91	(1)
Joint Profit Motive	91	(1)
Separate Entity vs. Co-ownership of Property	92	(1)
In General	92	(1)
Fractional Interests in Rental Real Property	93	(1)
Section 761(a) Election	93	(1)
Separate Entity vs. Expense Sharing, Employment, Loan and Other Relationships	94	(1)
Classification of Business Entities	94	(5)
Introduction	94	(2)
The Classification Regulations	96	(1)
Pre-1997 Regulations	96	(1)
Current Classification Regulations	96	(1)
Introduction	96	(1)
Entities with Two or More Members	97	(1)
Business Entities with One Owner	97	(1)
Entity Owned as Community Property	97	(1)
Foreign Entities	97	(1)
Election	98	(1)
Existing Entities	98	(1)
Publicly Traded Partnerships	98	(1)
Trusts	98	(1)
Choice of Entity Considerations	99	(1)
Review Questions	100	(3)
PART TWO: CORPORATE TAXATION
The C Corporation As a Taxable Entity	103	(12)
The Corporate Income Tax	105	(4)
Introduction	105	(1)
Rates	105	(1)
Graduated Rates	105	(1)
Phase-Out of Lower Graduated Rates	105	(1)
Qualified Personal Service Corporations	105	(1)
Determination of Taxable Income	106	(1)
Deductions: In General	106	(1)
The Dividends Received Deduction	107	(1)
Deduction for Domestic Production Activities	107	(1)
Amount of Deduction	107	(1)
Wages Paid Limitation	107	(1)
Definitions to Determine Deduction Base	107	(1)
Capital Gains and Losses	108	(1)
Taxable Year	108	(1)
In General	108	(1)
Personal Service Corporations	108	(1)
Fiscal Year Election for Personal Service Corporations	108	(1)
S Corporations	109	(1)
Accounting Method	109	(1)
Loss Disallowance Rules	109	(1)
Forced Matching Rules	109	(1)
Credits	109	(1)
The Corporate Alternative Minimum Tax	109	(3)
Introduction	109	(1)
In General	109	(1)
Small Corporation Exemption	110	(1)
First Year Exemption	110	(1)
Alternative Minimum Taxable Income	110	(1)
Depreciation	110	(1)
Net Operating Losses	111	(1)
Adjusted Current Earnings Adjustment	111	(1)
Depreciation	111	(1)
Earnings and Profits	111	(1)
Tax Preference Items	111	(1)
The Exemption Amount	112	(1)
Credits	112	(1)
Credits Against AMT	112	(1)
Minimum Tax Credit Against Regular Tax	112	(1)
Disregard of the Corporate Entity	112	(2)
Introduction	112	(1)
The Business Activity Test	113	(1)
The National Carbide Factors	113	(1)
The Bollinger Factors	113	(1)
Review Question	114	(1)
Formation of a Corporation	115	(32)
Introduction	117	(1)
Requirements for Nonrecognition Under § 351	117	(11)
``Property''	117	(1)
``Transfer''	118	(1)
Solely in Exchange for ``Stock''	118	(1)
In General	118	(1)
Nonqualified Preferred Stock	118	(1)
``Control''	119	(1)
``Immediately After the Exchange''	120	(1)
Binding Agreements to Dispose of Stock: In General	120	(1)
Binding Agreement to Dispose of Stock in Nontaxable Transaction	121	(1)
Voluntary Donative Dispositions of Stock	122	(1)
Corporate Transferors	122	(1)
Special Problems	122	(1)
Stock for Services	122	(1)
Taxation of the Service Provider	122	(1)
Deduction to Corporation	123	(1)
Service Provider Not a Transferor of Property	123	(1)
Stock Received for Services and Property	123	(1)
Disproportionate Transfers	124	(1)
Recapture Provisions	125	(1)
Installment Obligations	125	(1)
Investment Companies	125	(1)
Basis and Holding Period	125	(1)
Shareholder's Basis in Newco Stock	125	(1)
Shareholder's Holding Period in Newco Stock	126	(1)
Corporation's Basis and Holding Period in Transferred Assets	126	(1)
Limitations on Transfer of Built-in Losses	126	(2)
Treatment of Boot	128	(4)
In General	128	(1)
Allocation of Boot	128	(1)
Installment Boot	129	(1)
Basis and Holding Period	130	(1)
Shareholder's Basis	130	(1)
Corporation's Basis	131	(1)
Transfer of Appreciated Boot	132	(1)
Assumption of Liabilities	132	(7)
In General	132	(1)
Determination of Amount of Liabilities Assumed	133	(1)
Recourse Liability	133	(1)
Nonrecourse Liability	133	(1)
Tax Avoidance Transactions	133	(1)
Liabilities in Excess of Basis	134	(1)
In General	134	(1)
Transferor Remains Liable to Creditor	135	(1)
Avoiding § 357(c) by Transfer of Note	135	(1)
The Lessinger Case	135	(1)
The Peracchi Case	135	(1)
Synthesis of § 357(c) Cases	135	(1)
Character of § 357(c) Gain	136	(1)
Excluded Liabilities	136	(1)
Limit on Basis Increase Attributable to Liability Assumption	137	(1)
In General	137	(1)
Recognized Gain on Liability Assumption Not Taxable	137	(1)
Stock Basis Reduction for Transfers of Certain Liabilities	137	(1)
Background	137	(1)
Basis Stepdown Rule	138	(1)
Exceptions	138	(1)
Incorporation of a Going Business	139	(1)
Assignment of Income Doctrine	139	(1)
Accounts Payable and Contingent Liabilities	139	(1)
Tax Benefit Rule	139	(1)
Depreciation Methods	140	(1)
Contributions to Capital	140	(1)
Capital Contribution Defined	140	(1)
Treatment of the Contributor	140	(1)
Treatment of the Corporation	141	(1)
Non Pro Rata Surrender of Stock	141	(1)
Collateral Issues	141	(2)
Avoidance of § 351	141	(1)
Incentive to Avoid Qualification	141	(1)
Avoidance Techniques	141	(1)
Relationship to Other Code Sections	142	(1)
Reorganization Provisions	142	(1)
Dividend Provisions	142	(1)
Section 482	142	(1)
Organizational and Start-Up Expenses	143	(1)
Election to Deduct and Amortize	143	(1)
Organizational Expenditures Defined	143	(1)
Start-Up Expenditures Defined	143	(1)
Review Questions	144	(3)
Capital Structure	147	(16)
Introduction	148	(4)
Sources of Corporate Capital	148	(1)
Equity Capital	148	(1)
Preferred Stock	148	(1)
Common Stock	148	(1)
Convertible Stock	149	(1)
Debt Capital	149	(1)
Bonds and Debentures	149	(1)
Notes	149	(1)
Convertible Debt	150	(1)
Hybrid Instruments	150	(1)
Tax Differences Between Debt and Equity	150	(1)
Tax Advantages of Debt	150	(1)
Interest Deduction	150	(1)
Repayment of Principal	150	(1)
Defense Against Accumulated Earnings Tax	151	(1)
Tax Advantages of Equity	151	(1)
§ 351 Nonrecognition	151	(1)
Character of Loss on Worthlessness	151	(1)
Corporate Shareholders	151	(1)
Qualified Small Business Stock	151	(1)
Changing Stakes	152	(1)
Distinguishing Between Debt and Equity	152	(4)
§ 385	152	(1)
Delegation to Treasury	152	(1)
§ 385 Factors	152	(1)
Obligation of Consistency	153	(1)
The § 385 Regulations	153	(1)
Case Law	153	(1)
Form of the Obligation	153	(1)
Proportionality	154	(1)
Debt/Equity Ratio	154	(1)
Debt	154	(1)
Equity	154	(1)
When Is Debt/Equity Ratio Excessive?	155	(1)
Intent	155	(1)
Subordination	155	(1)
All or Nothing Approach	155	(1)
Consequences of Reclassification	155	(1)
Shareholder Guaranteed Debt	156	(1)
Character of Loss on Corporate Investment	156	(4)
In General	156	(1)
Loss on Worthlessness of Debt	157	(1)
Debt Evidenced by Security	157	(1)
Debt Not Evidenced by Security	157	(1)
Business vs. Nonbusiness Bad Debt	157	(1)
Shareholder-Employees	157	(1)
Loss on Worthlessness of Equity	158	(1)
In General	158	(1)
§ 1244 Stock	158	(1)
Qualifying Shareholders	158	(1)
Qualifying Stock	158	(1)
Small Business Corporation Status	159	(1)
Gross Receipts Test When Loss Sustained	159	(1)
Limit on Amount of Ordinary Loss	159	(1)
Reduction of Ordinary Loss	160	(1)
Special Problems of Excessive Corporate Debt	160	(2)
Junk Bonds	160	(1)
``Junk Bond'' Defined	160	(1)
Applicable High Yield Discount Obligations	161	(1)
Definition	161	(1)
Tax Treatment	161	(1)
Earnings Stripping	161	(1)
Limitation on Net Operating Losses	161	(1)
Review Questions	162	(1)
Nonliquidating Distributions	163	(18)
Introduction	165	(2)
Distribution vs. Dividend	165	(1)
Dividends Under Corporate Law	165	(1)
Distributions and Dividends Under the Code	165	(1)
Statutory Roadmap	165	(1)
Amount of the Distribution	165	(1)
Amount of the Dividend	166	(1)
Tax Treatment of Distributions	166	(1)
Qualified Dividends	166	(1)
Preferential Tax Rate	166	(1)
Qualified Dividend Defined	166	(1)
Minimum Holding Period Rule	167	(1)
Extraordinary Dividends	167	(1)
Earnings and Profits	167	(3)
The Concept	167	(1)
Determination of Earnings and Profits	168	(1)
Add Back Items Excluded From Taxable Income	168	(1)
Add Back Certain Tax-Deductible Items	168	(1)
Subtract Nondeductible Items	168	(1)
Add Back or Subtract Timing Adjustments	168	(1)
Depreciation	169	(1)
Gain or Loss on Sale of Depreciable Asset	169	(1)
§ 179 Deduction	169	(1)
Installment Sale Reporting	169	(1)
Inventory Accounting	169	(1)
Accounting for Earnings and Profits	169	(1)
Cash Distributions	170	(2)
In General	170	(1)
Current E & P Exceed Distributions	170	(1)
Distributions Exceed Current E & P	170	(1)
Accumulated E & P But Current Deficit	171	(1)
Property Distributions	172	(2)
Consequences to the Distributing Corporation	172	(1)
Background	172	(1)
Appreciated Property	172	(1)
General Rule	172	(1)
Treatment of Liabilities	172	(1)
Loss Property	172	(1)
Distribution of Corporation's Own Debt Obligations	173	(1)
Effect of Distributions on Earnings and Profits	173	(1)
In General	173	(1)
Appreciated Property	173	(1)
Loss Property	174	(1)
Corporation's Own Obligations	174	(1)
Consequences to Shareholders	174	(1)
Constructive Dividends	174	(2)
In General	174	(1)
Examples of Constructive Dividends	175	(1)
Unreasonable Compensation	175	(1)
Low Interest Loans	175	(1)
Loans Without Expectation of Repayment	175	(1)
Payments on Debt Reclassified as Equity	175	(1)
Bargain Sales or Leases to Shareholders	176	(1)
Excessive Payments to Shareholders for Purchase or Rental of Property	176	(1)
Personal Benefits to Shareholder	176	(1)
Transfers Between Commonly Controlled Corporations	176	(1)
Special Problems of Corporate Shareholders	176	(3)
The Dividends Received Deduction	176	(1)
Holding Period Requirements	176	(1)
Extraordinary Dividends: Basis Reduction	177	(1)
Debt-Financed Portfolio Stock	177	(1)
Earnings and Profits Adjustments	178	(1)
Preacquisition Dividend Strips	178	(1)
Review Questions	179	(2)
Stock Redemptions and Partial Liquidations	181	(38)
Introduction	183	(1)
Redemption Defined	183	(1)
Overview of Tax Consequences	183	(1)
Consequences to Distributee Shareholder	183	(1)
Consequences to Distributing Corporation	183	(1)
Tax Stakes	183	(1)
Constructive Ownership of Stock	184	(4)
In General	184	(1)
Family Attribution	184	(1)
Entity to Beneficiary (or Owner) Attribution	185	(1)
From Partnerships or Estates	185	(1)
From Trusts	185	(1)
From Corporations	185	(1)
Beneficiary (or Owner) to Entity Attribution	186	(1)
To Partnerships or Estates	186	(1)
To Trusts	186	(1)
To Corporations	186	(1)
Option Attribution	187	(1)
Other Operating Rules	187	(1)
Reattribution	187	(1)
No Double Family Attribution	187	(1)
No ``Sidewise'' Attribution	187	(1)
S Corporation Treated as Partnership	188	(1)
Redemptions Treated as Exchanges	188	(10)
Substantially Disproportionate Redemptions	188	(1)
Requirements	188	(1)
Series of Redemptions	189	(1)
``Piggyback'' Redemptions	190	(1)
Complete Terminations of a Shareholder's Interest	190	(1)
In General	190	(1)
Waiver of Family Attribution	190	(1)
All Interests Terminated	190	(1)
Ten-Year-Look-Forward Rule	191	(1)
Procedural Requirement	191	(1)
Ten-Year-Look-Back Rule	191	(1)
Waiver of Family Attribution by Entities	192	(1)
Entity Defined	192	(1)
Related Person Defined	192	(1)
Conditions for Entity Waiver	192	(1)
Redemptions Not Essentially Equivalent to a Dividend	193	(1)
The Meaningful Reduction Standard	193	(1)
Examples of Meaningful Reductions	194	(1)
Partial Redemption of Nonvoting Preferred Stock	194	(1)
Significant Loss of Control	194	(1)
Loss of Control in Concert with Others	194	(1)
Reduction of Ownership by Isolated Minority Shareholder	194	(1)
Family Discord	195	(1)
Partial Liquidations	195	(1)
The Concept	195	(1)
Only Noncorporate Shareholders Qualify	195	(1)
Partial Liquidation Defined	196	(1)
Not Essentially Equivalent to a Dividend	196	(1)
Corporate Contraction Doctrine	196	(1)
Involuntary Events	196	(1)
Change in Nature of Business	196	(1)
Reserve for Expansion	196	(1)
Termination of Business Safe Harbor	196	(1)
Qualified Trade or Business	197	(1)
Distribution of Assets or Proceeds of Sale	197	(1)
Pro Rata Redemptions	197	(1)
No Surrender of Stock Required	197	(1)
Specific Tax Consequences of Redemptions	198	(4)
Consequences to Shareholders	198	(1)
Redemption Treated as Exchange	198	(1)
Redemption Treated as § 301 Distribution	198	(1)
Current Regulations	198	(1)
Proposed Regulations	199	(1)
Basis of Distributed Property	200	(1)
Corporate Shareholders	200	(1)
Consequences to Distributing Corporation	201	(1)
Recognition of Gain or Loss	201	(1)
Effect on Earnings and Profits	201	(1)
Distribution of Appreciated Property	201	(1)
Redemption Treated as § 301 Distribution	201	(1)
Redemption Treated as Exchange	201	(1)
Stock Reacquisition Expenses	202	(1)
Redemptions Through Use of Related Corporations	202	(8)
Introduction	202	(1)
Policy	202	(1)
Section 304 Glossary	203	(1)
Property	203	(1)
Acquiring Corporation	203	(1)
Issuing Corporation	203	(1)
Control	204	(1)
Mode of Analysis	204	(1)
Brother-Sister Acquisitions: § 304(a)(1)	205	(1)
The Constructive Redemption	205	(1)
Tax Consequences	205	(1)
§ 301 Distribution	205	(1)
Exchange	206	(1)
Parent-Subsidiary Acquisitions: § 304(a)(2)	207	(1)
The Constructive Redemption	207	(1)
Tax Consequences	208	(1)
§ 301 Distribution	208	(1)
Sale	208	(1)
Overlap Situations	209	(1)
Relationship of § 304 to Other Code Sections	209	(1)
Coordination With § 351	209	(1)
Relationship to Partial Liquidation Rules	209	(1)
Redemptions to Pay Death Taxes	210	(2)
Policy	210	(1)
Requirements and Limitations	210	(1)
Stock Included in Decedent's Gross Estate	210	(1)
Relationship of Stock to Decedent's Estate	210	(1)
35% Rule	210	(1)
Two or More Corporations Aggregation Rule	210	(1)
Dollar Limitations	211	(1)
Timing of Redemption	211	(1)
Shareholder Must Bear Burden of Estate Tax	211	(1)
Consequences to Distributing Corporation	211	(1)
Redemptions and Related Transactions	212	(5)
Redemptions and Sales	212	(1)
Redemptions Pursuant to Buy-Sell Agreements	213	(1)
Buy-Sell Agreements	213	(1)
Constructive Dividend Issues	213	(1)
Redemptions Incident to Divorce	214	(1)
The Problem	214	(1)
Case Law	214	(1)
Regulations	215	(1)
Charitable Contribution Followed by Redemption	216	(1)
Review Questions	217	(2)
Stock Distributions and § 306 Stock	219	(18)
Stock Distributions	220	(8)
Introduction	220	(1)
Types of Stock Distributions	220	(1)
History of Taxation of Stock Distributions	220	(1)
Policy of Section 305	221	(1)
Nontaxable Stock Distributions	221	(1)
General Rule	221	(1)
Allocation of Basis	221	(1)
Holding Period	222	(1)
Consequences to Distributing Corporation	222	(1)
Taxable Stock Distributions	222	(1)
Election of Stock or Property	222	(1)
Disproportionate Distributions	222	(2)
Distributions of Common and Preferred Stock	224	(1)
Distributions on Preferred Stock	224	(1)
Distributions of Convertible Preferred	224	(1)
Deemed Stock Distributions	225	(1)
In General	225	(1)
Change in Conversion Ratio	225	(1)
Dividend Equivalent Periodic Redemption Plans	226	(1)
Basis and Holding Period	227	(1)
Consequences to the Distributing Corporation	227	(1)
Distributions of Stock Rights	227	(1)
``Rights'' Defined	227	(1)
Nontaxable Rights	227	(1)
In General	227	(1)
Allocation of Basis	227	(1)
De Minimis Rule	228	(1)
Holding Period	228	(1)
Taxable Rights	228	(1)
Section 306 Stock	228	(7)
The Preferred Stock Bailout	228	(1)
Background	228	(1)
Overview of § 306	229	(1)
Diminished Importance of § 306	229	(1)
Definition of § 306 Stock	229	(1)
In General	229	(1)
No Earnings and Profits	229	(1)
Stock With Transferred or Substituted Basis	230	(1)
Stock Received in a Reorganization or Division	230	(1)
Certain Stock Acquired in § 351 Exchange	230	(1)
Dispositions of § 306 Stock	231	(1)
Redemptions	231	(1)
Sales and Other Dispositions	232	(1)
In General	232	(1)
Treatment of Ordinary Income as Dividend	232	(1)
Exempt Dispositions	233	(1)
Complete Terminations and Partial Liquidations	233	(1)
Complete Liquidations	234	(1)
Nonrecognition Transactions	234	(1)
Transactions Not in Avoidance of Tax	234	(1)
Review Questions	235	(2)
Complete Liquidations and Taxable Corporate Acquisitions	237	(30)
Complete Liquidation Defined	239	(1)
Complete Liquidations Under § 331	239	(9)
Consequences to the Shareholders	239	(1)
Recognition of Gain or Loss	239	(1)
General Rule	239	(1)
Different Blocks of Stock	239	(1)
Series of Distributions	240	(1)
Distribution of Disputed and Contingent Claims	240	(1)
Installment Sale Reporting	241	(1)
Basis of Distributed Property	242	(1)
Consequences to the Distributing Corporation	242	(1)
Background	242	(1)
General Utilities Doctrine	242	(1)
Court Holding Doctrine	242	(1)
Former §§ 336 and 337	243	(1)
General Utilities Repeal	243	(1)
Recognition of Gain or Loss	243	(1)
Limitations on Recognition of Loss	244	(1)
Distributions to Related Persons	244	(1)
Related Person	244	(1)
Non Pro Rata	244	(1)
Disqualified Property	244	(2)
Property Acquired for Tax Avoidance Purpose	246	(1)
General Rule	246	(1)
Plans to Recognize Loss	246	(1)
Recapture in Lieu of Disallowance	246	(1)
Overlap with Section 336(d)(1)	247	(1)
Distributions in § 332 Liquidations	248	(1)
Distributions Pursuant to Reorganization Plan	248	(1)
Liquidation of a Subsidiary	248	(4)
Introduction	248	(1)
Consequences to the Shareholders	248	(1)
Requirements for Nonrecognition Under Section 332	248	(1)
Cancellation of Stock Pursuant to Plan	248	(1)
Control	248	(1)
Timing	248	(1)
Parent's Gain or Loss on Stock Eliminated	249	(1)
Intentionally Avoiding § 332	249	(1)
Backing Into Control	249	(1)
Subsidiary Insolvent	249	(1)
Basis and Holding Period of Distributed Property	250	(1)
Treatment of Minority Shareholders	250	(1)
Carryover of Tax Attributes	250	(1)
Consequences to the Liquidating Subsidiary	250	(1)
Distributions to Parent	250	(1)
Distributions to Minority Shareholders	251	(1)
Distributions to Satisfy Debt of Subsidiary to Parent	251	(1)
Distributions to Tax-Exempt and Foreign Parents	251	(1)
Taxable Acquisitions of a Corporate Business	252	(15)
Introduction	252	(1)
Asset Acquisitions	252	(1)
Tax Consequences to T	252	(1)
Tax Consequences to the T Shareholders	252	(1)
T Liquidates	252	(1)
T Does Not Liquidate	252	(1)
Tax Consequences to P	253	(1)
Allocation of Purchase Price and Basis	253	(1)
In General	253	(1)
Applying the Residual Method of Allocation	253	(1)
Effect of Agreement Between the Parties	254	(1)
Stock Acquisitions	254	(1)
Background	254	(1)
Kimbell-Diamond Case	255	(1)
Former § 334(b)(2)	255	(1)
Enactment of § 338	255	(1)
Operation of § 338: Basic Requirements	256	(1)
Qualified Stock Purchase Requirement	256	(1)
The § 338 Election	257	(1)
The Deemed Sale of T's Assets	257	(1)
Consequences to Old T	257	(1)
Determination of Aggregate Deemed Sale Price	257	(1)
Liabilities of Old T: Special Problems	258	(1)
Consequences to New T	259	(1)
Adjusted Grossed-Up Basis	259	(1)
Allocation of AGUB	259	(1)
Examples	259	(2)
The Consistency Period Requirements	261	(1)
The Consistency Period	261	(1)
Asset Acquisition Consistency Rules	262	(1)
Stock Acquisition Consistency Rules	262	(1)
Sales and Distributions of Stock of a Subsidiary	263	(1)
The § 338(h)(10) Election	263	(1)
The § 336(e) Election	263	(1)
Comparison of Acquisition Methods	264	(1)
Review Questions	265	(2)
Anti-Avoidance Provisions	267	(7)
Introduction	268	(1)
Accumulated Earnings Tax	268	(6)
Introduction	268	(1)
The Prohibited Tax Avoidance Purpose	269	(1)
Reasonable Needs of the Business	269	(1)
In General	269	(1)
Examples of Reasonable Business Needs	270	(1)
Examples of Unreasonable Accumulations	270	(1)
Anticipated Needs of the Business	271	(1)
The ``Business'' of the Corporation	271	(1)
Working Capital Needs of the Corporation	272	(1)
Stock Redemptions	272	(1)
Accumulated Taxable Income	272	(1)
In General	272	(1)
§ 535(b) Adjustments to Taxable Income	273	(1)
§ 561 Dividends Paid Deduction	273	(1)
§ 535(c) Accumulated Earnings Credit	274	(1)
Personal Holding Company Tax	274	(9)
Introduction	274	(1)
Definition of Personal Holding Company	275	(1)
Stock Ownership Requirement	275	(1)
Income Requirement	275	(1)
Definition of Personal Holding Company Income	276	(1)
Passive Investment Income	276	(1)
Rents	276	(1)
Mineral, Oil and Gas Royalties	276	(1)
Copyright Royalties	277	(1)
Produced Film Rents	277	(1)
Use of Corporate Property by Shareholder	277	(1)
Personal Service Contracts	277	(1)
Amounts Received From Estates and Trusts	278	(1)
Active Computer Software Royalties	278	(1)
Undistributed Personal Holding Company Income	279	(1)
Adjustments to Taxable Income	279	(1)
§ 561 Dividends Paid Deduction	279	(1)
In General	279	(1)
§ 563(b) Election	280	(1)
Consent Dividends	280	(1)
§ 564 Dividend Carryover	280	(1)
Liquidating Distributions	280	(1)
§ 547 Deficiency Dividends	281	(1)
Collapsible Corporations	281	(1)
Review Questions	282	(1)
Tax-Free Reorganizations	283	(42)
Introduction	285	(3)
Policy	285	(1)
Types of Corporate Reorganizations	285	(1)
Acquisitive Reorganizations	285	(1)
Nonacquisitive, Nondivisive Reorganizations	285	(1)
Divisive Reorganizations	285	(1)
Guide to Analyzing a Reorganization	286	(1)
Judicial Requirements	286	(1)
Continuity of Shareholder Proprietary Interest	286	(1)
Continuity of Business Enterprise	286	(2)
Business Purpose	288	(1)
Ruling Guidelines	288	(1)
Acquisitive Reorganizations	288	(28)
Type A Reorganizations (Statutory Merger or Consolidation)	288	(1)
Merger and Consolidation Defined	288	(1)
In General	288	(1)
Divisive Mergers	288	(1)
Mergers Involving Disregarded Entities	289	(1)
Continuity of Shareholder Proprietary Interest Requirement	289	(1)
Postacquisition Continuity	290	(1)
Prior Law	290	(1)
Current Regulations	291	(1)
Preacquisition Continuity by Historic T Shareholders	292	(1)
In General	292	(1)
Erosion of Historic Shareholder Concept	292	(1)
Current Regulations	293	(1)
Relationship to Taxable Stock Acquisitions	294	(1)
Drop Downs	295	(1)
Type B Reorganizations (Stock-for-Stock Acquisition)	295	(1)
Definition	295	(1)
Solely for Voting Stock Requirement	296	(1)
Fractional Shares	296	(1)
P's Payment of Expenses	296	(1)
Buyouts of Dissenting Minority Shareholders	296	(1)
Creeping Acquisitions	296	(1)
Contingent Consideration	297	(1)
Drop Downs	298	(1)
Subsequent Liquidation of T	298	(1)
Type C Reorganizations (Stock-for-Assets Acquisition)	298	(1)
Definition	298	(1)
``Substantially All of the Properties'' Requirement	298	(1)
Assumption of Liabilities	299	(1)
Boot Relaxation Rule	299	(1)
Liquidation Requirement	300	(1)
Creeping Acquisitions	300	(2)
Drop Downs	302	(1)
Overlap Issues	302	(1)
Forward Triangular Mergers	302	(1)
Background	302	(1)
Qualification Requirements	303	(1)
Subsequent Transfers of S Stock to P Subsidiary	303	(1)
Reverse Triangular Mergers	304	(1)
Background	304	(1)
Qualification Requirements	304	(1)
Payments to Dissenting Shareholders	305	(1)
Subsequent Sale of T Assets	306	(1)
Multi-Step Acquisitions: Special Problems	306	(3)
Treatment of the Parties to an Acquisitive Reorganization	309	(1)
Operative Provisions Glossary	309	(1)
Consequences to T Shareholders and Security Holders	310	(1)
Recognition of Gain or Loss	310	(1)
Character of Gain	310	(1)
Tax Stakes	311	(1)
Basis and Holding Period	311	(1)
§ 306 Stock	312	(1)
Consequences to T	312	(1)
Treatment of the Reorganization Exchange	313	(1)
Treatment of Distributions by T	313	(1)
Sales Prior to Liquidation of T	313	(1)
Basis and Holding Period	314	(1)
Consequences to P	315	(1)
Recognition of Gain or Loss	315	(1)
Basis and Holding Period of T Assets Received	315	(1)
Basis and Holding Period of T Stock Received	315	(1)
Failed Reorganizations	316	(1)
Nonacquisitive, Nondivisive Reorganizations	316	(4)
Nondivisive Type D Reorganizations (Transfer to Controlled Corporation)	316	(1)
Control	316	(1)
Distribution Requirement	316	(1)
Application	317	(1)
Type E Reorganizations (Recapitalizations)	317	(1)
Introduction	317	(1)
Judicial Requirements	317	(1)
Stock for Stock	317	(1)
Receipt of Boot	317	(1)
§ 305 Aspects	318	(1)
§ 306 Aspects	318	(1)
Nonqualified Preferred Stock	318	(1)
Bonds for Bonds	318	(1)
Bonds Exchanged for Stock	319	(1)
Stock Exchanged for Bonds or Stock and Bonds	319	(1)
Stock for Bonds	319	(1)
Stock for Stock and Bonds	319	(1)
Securities Bailouts	319	(1)
Type F Reorganizations (Change in Form)	320	(1)
Type G Reorganizations (Insolvency)	320	(1)
Special Problems	320	(1)
Liquidation--Reincorporation	320	(1)
Background	320	(1)
Attacks by the Service	321	(1)
Current Viability of Strategy	321	(1)
Dispositions of Unwanted Assets	321	(1)
Review Questions	321	(4)
Corporate Divisions	325	(28)
Introduction	327	(3)
Types of Corporate Divisions	327	(1)
Spin-Offs	327	(1)
Split-Offs	327	(1)
Split-Ups	328	(1)
Type D Reorganization Preceding a Division	328	(1)
Summary of Requirements for Tax-Free Division	329	(1)
Active Trade or Business	330	(5)
Trade or Business	330	(1)
Active Conduct	330	(1)
Divisions of a Single Integrated Business	331	(1)
Vertical Divisions	331	(1)
Horizontal (or Functional) Divisions	331	(1)
Five-Year Business History Rule	332	(1)
Expansion of Existing Trade or Business	332	(1)
Acquisition of a New Trade or Business	333	(1)
Disposition of a Recently Acquired Business	334	(1)
Device Limitation	335	(3)
Introduction	335	(1)
Device Factors	335	(1)
Pro Rata Distribution	335	(1)
Subsequent Sale or Exchange of P or S Stock	335	(1)
Nature and Use of Assets	336	(1)
Nondevice Factors	337	(1)
Corporate Business Purpose	337	(1)
P is Publicly Traded and Widely Held	337	(1)
Distributions to Domestic Corporate Shareholders	337	(1)
Presumptive Nondevice Transactions	337	(1)
Absence of Earnings and Profits	338	(1)
Section 302 or 303 Exchange Redemption	338	(1)
Distribution of Control Requirement	338	(1)
Business Purpose	338	(3)
Background	339	(1)
Advance Rulings	339	(1)
Corporate Business Purpose	339	(1)
Substantial Non-Tax Business Purpose	340	(1)
Examples of Valid Business Purposes	340	(1)
Business Purpose for Distribution	341	(1)
Relationship to Device Limitation	341	(1)
Continuity of Interest	341	(1)
Tax Treatment of the Parties to a Corporate Division	342	(5)
Shareholders and Security Holders	342	(1)
No Boot Received	342	(1)
Boot Received	342	(1)
Boot Defined	342	(1)
Spin-Offs	343	(1)
Split-Offs and Split-Ups	343	(1)
Basis and Holding Period	344	(1)
The Distributing Corporation	344	(1)
Distribution Preceded by Reorganization	344	(1)
P's Formation of S in Type D Reorganization	344	(1)
P's Distribution of Qualified and Other Property	345	(1)
Distribution Not Preceded by Reorganization	345	(1)
Certain Disqualified Distributions	345	(1)
Disqualified Distribution	345	(1)
Disqualified Stock	345	(1)
Section 355 Distributions Related to Acquisition Plan	346	(1)
Tax Attributes	346	(1)
Corporate Division Combined with Tax-Free Reorganization	347	(4)
Background	347	(1)
Historical Opportunities and Pitfalls	347	(1)
The Morris Trust Technique	347	(1)
Historical Pitfalls	347	(1)
IRS Changes of Position	348	(1)
§ 355 Qualification	348	(1)
Qualification of Acquisitive Reorganization	348	(1)
Corporate-Level Gain Recognition: § 355(e)	348	(1)
Recognition of Gain by Distributing Corporation	348	(1)
Plan Requirement	349	(1)
Two-Year Presumption	349	(1)
Rebutting the Presumption	350	(1)
Plan and Nonplan Factors	350	(1)
Safe Harbors	350	(1)
Examples	350	(1)
Review Questions	351	(2)
Carryovers of Corporate Tax Attributes	353	(4)
Introduction	354	(1)
Operation of § 381	354	(3)
In General	354	(1)
§ 381 Limitations on Carryovers	355	(1)
Earnings and Profits (E & P) Deficits	355	(1)
Net Operating Losses	356	(1)
Carryovers in Divisive Reorganizations	356	(1)
Limitations on Carryovers of Corporate Tax Attributes	357	(12)
Introduction	357	(1)
Limitation on Net Operating Loss Carryforwards: § 382	357	(1)
Ownership Change Requirement	357	(1)
In General	357	(1)
Owner Shifts Involving 5% Shareholders	358	(1)
Equity Structure Shifts	359	(1)
Attribution Rules	360	(1)
Effect of an Ownership Change	360	(1)
Continuity of Business Enterprise Requirement	360	(1)
The § 382 Limitation	361	(1)
In General	361	(1)
Long-Term Tax-Exempt Rate	362	(1)
Value of the Company	362	(1)
Special Rules for Built-In Gains and Losses	363	(2)
Special Limitations on Other Tax Attributes: § 383	365	(1)
Limitation on Use of Preacquisition Losses to Offset Built-In Gains: § 384	365	(1)
Acquisitions to Evade or Avoid Income Tax: § 269	366	(1)
Consolidated Return Rules	366	(1)
Review Questions	367	(2)
Affiliated Corporations	369	(10)
Introduction	370	(1)
Restrictions on Multiple Tax Benefits	370	(3)
In General	370	(1)
§ 1561	370	(1)
Tax Benefits Restricted	370	(1)
Component Members of a Controlled Group of Corporations	371	(1)
Parent-Subsidiary Controlled Group	371	(1)
Brother-Sister Controlled Group	371	(1)
Other Rules	372	(1)
Other Restrictions	372	(1)
Transactions Involving Related Corporations and Other Taxpayers	373	(2)
In General	373	(1)
Allocations of Income and Deductions: § 482	373	(1)
Purpose of § 482	373	(1)
Commonly Controlled Trades or Businesses	374	(1)
The Arm's Length Standard	374	(1)
Consolidated Returns	375	(3)
Introduction	375	(1)
Eligibility to File a Consolidated Return	376	(1)
Computing Consolidated Taxable Income	376	(1)
In General	376	(1)
Intercompany Distributions	377	(1)
Intercompany Transactions	377	(1)
Review Questions	378	(1)
S Corporations	379	(38)
Introduction	381	(1)
Eligibility for S Corporation Status	381	(6)
Ineligible Corporations and Subsidiaries	381	(1)
In General	381	(1)
Wholly Owned Subsidiaries	382	(1)
100-Shareholder Limit	382	(1)
Restrictions on Types of Shareholders	383	(1)
In General	383	(1)
Nonresident Alien Restriction	383	(1)
Trusts as Eligible Shareholders	383	(1)
Qualified Subchapter S Trusts	384	(1)
Electing Small Business Trusts	385	(1)
One--Class--Of--Stock Requirement	385	(1)
In General	385	(1)
Buy--Sell and Redemption Agreements	386	(1)
Obligations Treated as Equity Under General Principles	386	(1)
Straight Debt Safe Harbor	386	(1)
Background	386	(1)
Straight Debt Defined	386	(1)
Treatment of Straight Debt for Other Purposes	387	(1)
Treatment of Converted C Corporation Debt	387	(1)
Election, Revocation and Termination of Subchapter S Status	387	(4)
Electing S Corporation Status	387	(1)
In General	387	(1)
Timing and Effective Date of Election	388	(1)
Revocation and Termination of S Corporation Status	389	(1)
Revocation	389	(1)
Termination	389	(1)
Ceasing to Be a Small Business Corporation	389	(1)
Passive Income Limitation for Certain S Corporations	389	(1)
S Termination Year	390	(1)
Inadvertent Terminations	390	(1)
Tax Treatment of S Corporation Shareholders	391	(11)
Introduction	391	(1)
Corporate Level Determination of Tax Results	391	(1)
Accounting Method	391	(1)
Taxable Year	391	(1)
In General	391	(1)
Natural Business Year	392	(1)
§ 444 Fiscal Year Election	393	(1)
S Corporation Taxable Income	393	(2)
Tax Elections	395	(1)
Tax Consequences to Shareholders	395	(1)
Timing and Character of Pass Through Items	395	(1)
Determining Each Shareholder's Pro Rata Share	396	(1)
In General	396	(1)
Special Rule for Termination of a Shareholder's Interest	396	(1)
Special Rule for a Family Group	397	(1)
Limitations on Losses	398	(1)
§ 1366(d) Basis Limit	398	(1)
Basis Credit for Shareholder Guarantee of S Corporation Debt	399	(1)
Use of Suspended Losses After Termination of S Corporation Status	399	(1)
Related Provisions	400	(1)
Basis Adjustments	400	(2)
Sale of S Corporation Stock	402	(1)
Distributions to Shareholders	402	(4)
S Corporations Without E & P	403	(1)
S Corporations With E & P	403	(1)
In General	403	(1)
The Accumulated Adjustments Account	403	(2)
Distributions of Property	405	(1)
Ordering of Basis Adjustments	406	(1)
Distributions Following Termination of S Corporation Status	406	(1)
Taxation of the S Corporation	406	(5)
§ 1374 Tax on Built-in Gains	407	(1)
Policy of Built-in Gains Tax	407	(1)
Operation of § 1374	407	(1)
Treatment of Substituted Basis Properties	408	(1)
Installment Sales and § 1374	409	(1)
§ 1375 Tax on Excessive Passive Investment Income	409	(2)
Coordination of Subchapter S With Subchapter C and Other Tax Provisions	411	(1)
Subchapter C	411	(1)
Other Tax Provisions	411	(1)
Employment Tax Issues	411	(1)
Review Questions	412	(5)
PART THREE: PARTNERSHIP TAXATION
Formation of a Partnership	417	(11)
Introduction	419	(1)
Contributions of Property	419	(4)
General Rules	419	(1)
Related Issues	420	(1)
Recapture Provisions	420	(1)
Installment Obligations	420	(1)
Investment Partnerships	420	(1)
Noncompensatory Options	420	(1)
In General	420	(1)
Noncompensatory Option Defined	420	(1)
Applicability of Section 721 to Noncompensatory Options	420	(1)
Basis and Holding Period	421	(1)
``Outside'' and ``Inside'' Bases	421	(1)
Holding Period	421	(2)
Treatment of Liabilities	423	(5)
Impact on Partner's Outside Basis	423	(1)
Introduction	423	(1)
Classification of Liabilities and Partners' Shares of Partnership Liabilities	423	(1)
Economic Risk of Loss	424	(3)
Special Rules	427	(1)
Part Recourse and Part Nonrecourse Liabilities	427	(1)
Tiered Partnerships	427	(1)
Contributions of Property Encumbered by Recourse Liabilities	427	(1)
Contributions of Services	428	(9)
Introduction	428	(1)
Receipt of a Capital Interest for Services	429	(1)
Tax Consequences to the Service Partner	429	(1)
Tax Consequences to the Partnership	430	(1)
Business Expense Deduction to the Partnership	430	(1)
Taxable Event to Partnership	430	(1)
Receipt of a Profits Interest for Services	431	(1)
Tax Consequences to the Service Partner	431	(1)
Historical Approach	431	(1)
The Diamond Case	431	(1)
Safe Harbor: Revenue Procedure 93-27	432	(1)
Timing Issues: Revenue Procedure 2001-43	433	(1)
Tax Consequences to the Partnership	433	(1)
Organization and Syndication Expenses	434	(1)
General Rule	434	(1)
Deduction and Amortization of Organization Fees	434	(1)
Syndication Expenses	434	(1)
Review Questions	434	(3)
Operations of a Partnership	437	(74)
Aggregate and Entity Theories of Partnership Taxation	439	(1)
Taxing Partnership Operations	439	(13)
Partnership Level Determination of Tax Results	439	(1)
Partnership Accounting Method	439	(1)
Partnership Taxable Year	439	(1)
Mechanical Rules	439	(1)
Business Purpose	440	(1)
Fiscal Year Election	441	(1)
Partnership Taxable Income	441	(1)
Tax Elections	442	(1)
Tax Consequences to the Partners	442	(1)
Timing and Character of Pass Through Items	442	(1)
Basis Adjustments	443	(1)
Limitation on Losses	444	(1)
Related Provisions	445	(1)
At-Risk Limitation	445	(1)
Introduction	445	(1)
At-Risk Amount	445	(2)
Limited Partner Guarantee	447	(1)
Adjustments to Amount At Risk and Carryover of Suspended Losses	447	(1)
Passive Activity Loss Limitation	448	(1)
Introduction	448	(1)
Material Participation	448	(1)
Definition of ``Activity''	449	(1)
Later Use of Suspended Losses	450	(1)
Electing Large Partnerships	450	(1)
ELP Defined; ELP Election	451	(1)
Effect of ELP Election on Partners	451	(1)
Taxable Income of ELP	451	(1)
ELP Deductions: Special Rules	451	(1)
Partnership Allocations	452	(47)
Introduction	452	(1)
Special Allocations	452	(1)
Introduction	452	(1)
Partnership Accounting: The Basics	452	(2)
Economic Effect	454	(1)
Introduction	454	(1)
Basic Test: ``The Big Three''	454	(4)
Alternate Test for Economic Effect	458	(3)
Economic Effect Equivalence	461	(1)
The Relationship Between Economic Risk of Loss and Economic Effect	461	(2)
Substantiality	463	(1)
General Rules	463	(1)
Shifting and Transitory Allocations	464	(1)
Shifting Allocations	464	(1)
Transitory Allocations	465	(2)
Presumption Validating ``Gain Chargeback'' Provisions	467	(1)
Partner's Interest in the Partnership	467	(3)
Allocations of Depreciation Recapture	470	(1)
Allocations of Tax Credits	470	(1)
Contributed Property	470	(1)
§ 704(c) Allocations: General Principles	470	(2)
§ 704(c) Allocation Methods	472	(1)
In General	472	(1)
The Ceiling Rule	472	(1)
Sales and Exchanges of Contributed Property	473	(1)
Traditional Method	473	(2)
Traditional Method With Curative Allocations	475	(1)
Remedial Method	476	(1)
Depreciation and Depletion	477	(1)
Traditional Method	477	(1)
Traditional Method With Curative Allocations	478	(1)
Remedial Method	479	(1)
Application of § 704(c)(1)(A) Principles to the Entry of a New Partner	480	(1)
Distributions of Contributed Property Within Seven Years of Contribution	481	(1)
Characterization of Gain or Loss Upon Partnership's Disposition of Contributed Property	482	(1)
Unrealized Receivables	482	(1)
Inventory Items	482	(1)
Capital Loss Property	483	(1)
Depreciation Recapture	484	(1)
Anti-Abuse Rule for Loss Property	484	(1)
Nonrecourse Liabilities	484	(1)
Introduction	484	(1)
Allocations Attributable to Nonrecourse Liabilities	485	(1)
Introduction	485	(1)
``Partnership Minimum Gain''	485	(1)
``Nonrecourse Deductions''	486	(1)
The Test for Respecting Allocations of Nonrecourse Deductions	486	(1)
Minimum Gain Chargeback Requirement	486	(4)
Refinancings and Distributions of Nonrecourse Liability Proceeds Allocable to Increase in Minimum Gain	490	(1)
The Partners' Shares of Partnership Nonrecourse Liabilities	491	(6)
Allocations Where Partners' Interests Vary During the Year	497	(1)
Introduction	497	(1)
§ 706(d)(2): Distributive Shares of Allocable Cash Basis Items	498	(1)
Tiered Partnerships	499	(1)
Transactions Between Partners and Partnerships	499	(7)
Transactions Involving Services or the Use of Property	499	(2)
§ 707(a)(2)(A): Disguised Payments for Services or Property	501	(1)
Introduction	501	(1)
707(a)(2)(A) Factors	502	(1)
Guaranteed Payments	503	(1)
Introduction	503	(1)
Calculation of Guaranteed Payments	504	(1)
Sales and Exchanges Between Partners and Partnerships	505	(1)
General Rules	505	(1)
§ 707(a)(2)(B): Disguised Sales Between Partners and Partnerships	505	(1)
Family Partnerships	506	(1)
Review Questions	507	(4)
Sales and Exchanges of Partnership Interests	511	(20)
Introduction	512	(1)
Tax Consequences to the Selling Partner	512	(10)
Computation of Gain or Loss	512	(1)
Amount Realized	512	(1)
Adjusted Basis of Partnership Interest	512	(1)
Characterization of Gain or Loss	513	(1)
General Rule: § 741	513	(1)
Definition of § 751 Assets	513	(1)
Unrealized Receivables	513	(1)
Inventory Items	514	(1)
Computation of § 751 Gain or Loss	515	(3)
Capital Gains Look-Through Rules	518	(1)
Holding Period	518	(2)
Related Issues	520	(1)
Installment Sale of a Partnership Interest	520	(1)
Exchange or Conversion of Partnership Interests	521	(1)
Exchanges of Partnership Interests	521	(1)
Conversions of Partnership Interests	521	(1)
Conversions into LLC or LLP Interests	521	(1)
Tax Consequences to the Buying Partner	522	(6)
Introduction	522	(1)
Operation of § 743(b)	522	(1)
Requirement of § 754 Election or Substantial Built-in Loss	522	(1)
General Rules	522	(1)
Special Rules	523	(1)
Adjustments to Inside Basis Under § 743(b)	523	(1)
The Overall § 743(b) Adjustment	523	(3)
Allocation of the Adjustment	526	(2)
Effect of § 743(b) Adjustment	528	(1)
Contributed Property with a Built-in Loss	528	(1)
Review Questions	528	(3)
Nonliquidating Distributions	531	(24)
Consequences to the Partner	533	(7)
Cash Distributions	533	(1)
In General	533	(1)
Distributions of Marketable Securities	534	(1)
Property Distributions	535	(1)
Recognition of Gain or Loss	535	(1)
Basis Consequences	535	(1)
General Rule: Transferred Basis	535	(1)
Basis Limitation	535	(1)
Allocation of Basis	536	(1)
Holding Period	536	(2)
Section 732(d) Election	538	(1)
Dispositions of Distributed Property	539	(1)
General Rules: § 735	539	(1)
Depreciation Recapture	540	(1)
Consequences to the Partnership	540	(5)
Nonrecognition of Gain or Loss	540	(1)
Impact on Inside Basis	541	(1)
General Rule: No Adjustment to Inside Basis	541	(1)
Section 734(b) Adjustment	541	(1)
Allocation of Basis Adjustment	541	(3)
Adjustments to Capital Accounts	544	(1)
Mixing Bowl Transactions	545	(3)
Introduction	545	(1)
Distributions of Contributed Property to Another Partner	545	(1)
The Attempted Strategy	545	(1)
General Rule of § 704(c)(1)(B)	545	(1)
Exceptions	546	(1)
Distributions of Other Property to the Contributing Partner	547	(1)
The Attempted Strategy	547	(1)
General Rule of § 737	547	(1)
Exceptions	548	(1)
Distributions Which Shift the Partners' Interests in § 751 Assets: § 751(b)	548	(5)
Purpose and Scope of § 751(b)	548	(1)
Section 751(b) Assets	549	(1)
Operation of § 751(b)	549	(3)
Criticisms of § 751(b)	552	(1)
Review Questions	553	(2)
Liquidating Distributions	555	(20)
Liquidation of a Partner's Interest	556	(11)
Introduction	556	(1)
§ 736(b) Payments	557	(1)
Tax Consequences of § 736(b) Payments to the Partner	557	(1)
Recognition of Gain	557	(1)
Recognition of Loss	557	(1)
Basis of Distributed Property: In General	557	(1)
Allocation of Basis	557	(1)
Holding Period	558	(1)
Tax Consequences of § 736(b) Payments to the Partnership	559	(1)
General Rules	559	(1)
Section 754 Election	559	(1)
Interaction of § 736 and § 751(b)	560	(2)
§ 736(a) Payments	562	(1)
Definition of § 736(a) Payments	562	(1)
Tax Treatment of § 736(a) Payments	562	(1)
Timing of § 736(a) Payments: In General	563	(1)
Special Treatment for Partnership Goodwill	563	(1)
Allocation and Timing of § 736 Payments	563	(1)
Allocation	563	(1)
Timing	564	(3)
Liquidation vs. Sale	567	(1)
In General	567	(1)
Abandonment of a Partnership Interest	567	(1)
Liquidation of the Entire Partnership	567	(7)
Voluntary Liquidation	567	(1)
In General	567	(1)
Incorporation of a Partnership	568	(1)
Partnership Mergers and Divisions	569	(1)
Merger or Consolidation	569	(1)
Divisions	570	(1)
Termination Forced by Statute	571	(1)
§ 708(b)(1)(B)	571	(1)
Effect of Termination	571	(3)
Review Questions	574	(1)
Death of a Partner	575	(6)
Introduction	576	(1)
The Deceased Partner's Distributive Share in the Year of Death	576	(1)
Estate Tax, Income in Respect of a Decedent, and Basis Consequences	576	(4)
Federal Estate Tax	576	(1)
Income in Respect of a Decedent (``IRD'')	576	(1)
In General	576	(1)
Distributive Share in Year of Death	577	(1)
Income in Respect of a Decedent in a Sale at Death or Continuing Interest	577	(1)
Income in Respect of a Decedent in a Liquidation of a Partnership Interest	577	(1)
Outside and Inside Basis	577	(3)
Review Questions	580	(1)
Partnership Anti-Abuse Rules	581
Introduction	582
Abuse of Subchapter K Rules	582
In General	582
``Common Law'' Requirements of Subchapter K	582
Administrative Convenience Exception	583
Impermissible Tax Reduction Purpose	583
Facts and Circumstances Analysis	583
In General	583
Specific Factors	584
Examples	584
Commissioner's Power to Recast Transactions	585
Abuse of Partnership Entity	586
Review Questions	586
Appendices
Answers to Review Questions	589
Practice Examination	623
Correlation Chart	635
Glossary	639
Table of Cases	651
Index	681