Federal Income Taxation of Corporations

by McDaniel, Paul R.; McMahon, Martin J.; Simmons, Daniel L.

• ISBN13: 9781566627740
• ISBN10: 1566627745
• Edition: 2nd
• Format: Hardcover
• Copyright: 1999-05-01
• Publisher: Foundation Pr

Table of Contents

Preface	iii
Acknowledgements	ix
Table of Internal Revenue Code Sections	xxv
Table of Treasury Regulations	xlix
Table of Cases and Rulings	lix
PART I Taxation of Corporations and Shareholders	1	(360)
Taxation of Corporate Income	1	(38)
The Regular Corporate Income Tax	1	(5)
The Alternative Minimum Tax	6	(4)
Selected Tax Policy Issues	10	(29)
The Incidence of the Corporation Income Tax	10	(7)
Integration of the Corporation and Personal Income Taxes	17	(22)
Identifying Taxable Corporate Entities	39	(35)
What Is a ``Corporation'' Under the Income Tax?	40	(9)
Regard and Disregard of the Corporate Entity	49	(18)
Reallocation of Income	67	(7)
Formation of the Corporation	74	(56)
Receipt of Stock for Property	74	(15)
Basic Principles	74	(6)
``Solely for Stock''---The Receipt of Other Property	80	(9)
``Solely'' for Stock: Assumption of Liabilities	89	(20)
The ``Control'' Requirement	109	(11)
Receipt of Stock for Services	120	(3)
``Property'' and Midstream Transfers of Income Items	123	(7)
The Capital Structure of the Corporation	130	(54)
Debt Versus Equity	130	(38)
Deductible Interest or Nondeductible Dividend Distribution: General Principles Governing Classification as Debt or Equity	132	(26)
Deductions for Loss of Investment in a Corporation	158	(10)
Bond Discount and Premium	168	(16)
Original Issue Discount	168	(13)
Bond Premium	181	(3)
Dividend Distributions	184	(51)
Introduction	184	(3)
Dividend Distributions in General	187	(15)
Distribution of a Dividend in Kind	202	(7)
Disguised Dividends	209	(18)
Intercorporate Dividends	227	(8)
Stock Redemptions	235	(56)
Introduction	235	(3)
Substantially Disproportionate Redemptions	238	(5)
Termination of a Shareholder's Interest	243	(6)
Distributions Not ``Essentially Equivalent to a Dividend''	249	(11)
Partial Liquidations	260	(12)
Redemptions Through the Use of Related Corporations	272	(14)
Stock Redemption Distributions to Pay Death Tax	286	(5)
Stock Dividends	291	(40)
Taxable Versus Nontaxable Stock Dividend	291	(24)
Judicial and Statutory Background	291	(10)
The Current Statutory Structure	301	(14)
The Preferred Stock Bailout	315	(16)
The Source of the Problem	315	(1)
Operation of Section 306	316	(15)
Corporate Liquidations	331	(30)
Introduction	331	(2)
Treatment of the Corporation	333	(5)
Treatment of Shareholders	338	(7)
Liquidation of Subsidiary Corporations---Section 332	345	(16)
PART II Elective Passthrough Tax Treatment	361	(70)
S Corporations	361	(70)
Introduction	361	(4)
Eligibility, Election and Termination	365	(19)
Stockholder Rules	365	(6)
Corporate Eligibility	371	(7)
S Corporation Election Procedures	378	(3)
Revocation or Termination of S Corporation Status	381	(2)
Coordination With Subchapter C	383	(1)
Effect of the Subchapter S Election by a Corporation With No C Corporation History	384	(29)
Passthrough of Income and Loss	384	(25)
Distributions	409	(4)
S Corporations That Have a C Corporation History	413	(15)
Distributions From an S Corporation With Earnings and Profits Accumulated From Subchapter C Years	413	(4)
Passive Investment Income of an S Corporation With Accumu-lated Earnings and Profits	417	(3)
Built--In Gain Tax	420	(7)
Policy Aspects of the Treatment of Subchapter S Corporations With a Subchapter C History	427	(1)
Policy Aspects of Subchapter S	428	(3)
PART III Affiliated Corporation	431	(34)
Affiliated Corporations	431	(34)
Tax Reduction With Multiple Corporate Taxpayers	432	(7)
Background	432	(1)
Sections 1561--1563	433	(4)
Reallocation of Income Under Section 482	437	(2)
Consolidated Returns	439	(26)
PART IV Corporate Acquisition Techniques	465	(176)
Taxable Acquisitions: The Purchase and Sale of a Corporate Business	465	(27)
Assets Acquisitions	467	(8)
Stock Acquisitions	475	(14)
Medium of Payment: Special Problems of Subordinated Convertible Debentures	489	(3)
Distributions Made in Connection With the Sale of a Corporate Business: ``Bootstrap'' Acquisitions	492	(23)
Bootstrap Transactions Involving Individuals: Capital Gain Versus Ordinary Income	493	(14)
Bootstrap Transactions Involving Corporations	507	(8)
Tax Free Acquisitive Reorganizations	515	(126)
Early Judicial Background	515	(3)
The Fundamental Rules Governing Reorganizations	518	(65)
The Basic Statutory Scheme	518	(8)
The Continuity of Interest Requirement	526	(14)
The Continuity of Business Enterprise Requirement	540	(4)
Judicial Limitations	544	(20)
Tax Results to the Parties to a Reorganization	564	(19)
Stock for Stock Acquisitions: Type (B) Reorganizations	583	(24)
Stock for Assets Acquisitions: Type (C) Reorganizations	607	(10)
Triangular Reorganizations	617	(9)
Bankruptcy Reorganizations: Type (G) Reorganizations	626	(9)
Tax Policy: Acquisition Transactions	635	(6)
PART V Nonacquisitive Reorganizations	641	(88)
Single Corporation Reorganizations	641	(33)
Statutory Structure	641	(2)
Recapitalizations	643	(13)
Changes in Identity, Form, or Place of Organization: Type (F) Reorganizations	656	(8)
Nondivisive Type (D) Reorganizations	664	(10)
Corporate Divisions: Spin--Offs, Split--Offs, and Split--Ups	674	(55)
Corporate Divisions: General Rules	674	(11)
``Active Conduct of a Trade or Business,'' ``Device,'' and Other Limitations	685	(24)
The ``Device'' Limitation	690	(5)
Active Conduct of a Trade or Business	695	(11)
The ``Business Purpose'' Requirement	706	(3)
Distribution of ``Control'' and Continuity of Interest Requirements	709	(9)
Divisive Distributions In Connection with Acquisitions	718	(11)
PART VI Corporate Attributes in Reorganizations and Other Transactions	729	(50)
Carry Over and Limitation of Corporate Tax Attributes	729	(50)
Carry Over of Tax Attributes	729	(7)
Limitations on Net Operating Loss Carryovers Following a Change In Corporate Ownership	736	(43)
PART VII Special Rules to Prevent Avoidance of Shareholder Lever Tax	779	(28)
Penalty Taxes	779	(28)
The Accumulated Earnings Tax	780	(10)
The Personal Holding Company Tax	790	(5)
Collapsible Corporations	795	(12)
Index	807