The Federal Income Taxation of Corporations, Partnerships, Limited Liability Companies and Their Owners

by Kwall, Jeffrey L.

• ISBN13: 9781599414607
• ISBN10: 1599414600
• Edition: 3rd
• Format: Paperback
• Copyright: 2008-10-28
• Publisher: Foundation Pr

Summary

The 2009 Supplement fully integrates the American Jobs Creation Act of 2004, the Tax Increase Prevention and Reconciliation Act of 2005, the Small Business and Work Opportunity Act of 2007 and the Tax Technical Corrections Act of 2007. The 2009 Supplement also includes new cases, rulings and notes. Highlights include: The addition of the recently decided Supreme Court case Boulware v. United States to the discussion of constructive distributionsAn expanded discussion of the partnership anti-abuse regulationUpdated section 351, 358 and 362 materials reflecting the mandatory step-down in basis of loss property contributed to a corporationUpdated section 734, 743 and 754 materials reflecting the mandatory step-down in partnership inside basis for certain sales of partnership interests and distributions of partnership propertyDiscussion of new regulations clarifying that 40% stock is sufficient consideration to satisfy continuity of proprietary interest in a corporate reorganization the addition of Revenue Ruling 2008-25 to the discussion of multi-step corporate acquisitions.

Author Biography

Jeffrey L. Kwall, Kathleen and Bernard Beazley Professor of Law, Loyola University Chicago School of Law

Table of Contents

Preface	p. iii
Introduction
Perspective	p. 1
The Business As An Entity Under State Law	p. 1
The Business As A Taxpaying Entity - The C Corporation	p. 2
Proposal for Uniform Taxation Of All Businesses - Preview of the Future?	p. 2
Operations
C Corporation Operations	p. 3
Corporate Income Tax	p. 3
Tax Rates	p. 3
Scope Of Corporate Deductions	p. 4
S Corporation Operations	p. 5
Allocation To Shareholders	p. 5
Rigid Allocation Rule	p. 5
Consequences of Operating Loss	p. 5
Distinguishing S Corporation From C Corporation	p. 5
Small Business Corporation	p. 5
The Election	p. 6
Transitional Problems	p. 6
Accumulated C Earnings	p. 6
Partnership Operations	p. 8
Allocation To Partners	p. 8
Allowance Of Allocated Deduction/Loss	p. 10
Distinguishing Partnership From Taxpaying Entity	p. 10
Non-Publicly Traded Partnerships	p. 10
Distributions
C Corporation Distributions	p. 12
One-Side Distribution	p. 12
Dividend To The Extent Of Earnings & Profits	p. 12
Camouflaged One-Side Distributions	p. 13
S Corporation Distributions	p. 19
One-Side Distribution	p. 19
No Accumulated Earnings & Profits	p. 19
Accumulated Earnings & Profits	p. 19
Partnership Distributions	p. 20
Distribution In Liquidation Of Partner's Interest	p. 20
Impact Of [section]751 Assets	p. 20
Liquidation Of Interest	p. 20
Partnership Level Adjustments	p. 20
Termination Of Partnership	p. 21
Contributions
C Corporation Contributions	p. 22
Transfer Of Property For Stock	p. 22
Basis As Gain/Loss Preservation Mechanism	p. 22
S Corporation Contributions	p. 25
Transfer Of Property For Stock	p. 25
Basis As Gain/Loss Preservation Mechanism	p. 25
Partnership Contributions	p. 28
Transfer Of Property For Partnership Interest	p. 28
Basis As Gain/Loss Preservation Mechanism	p. 28
Partnership Anti-Abuse Rule	p. 28
Corporate Dispositions and Acquisitions
Taxable Transfers	p. 33
Asset Transfer	p. 33
Tax Consequences To Buyer	p. 33
Residual Method Of Allocation	p. 33
Nontaxable Transfers	p. 34
Perspective	p. 34
Common Law Doctrines	p. 34
Statutory Merger	p. 34
Continuity Of Business Enterprise	p. 35
Scope Of A Merger	p. 35
Acquisition by Subsidiary for Parent Stock	p. 36
Acquisition by Parent Followed by "Drop Down"	p. 36
Reverse Triangular Merger	p. 36
Treatment As A "B" Reorganization	p. 36
Multi-Step Acquisitions	p. 37
Carryovers and Carrybacks	p. 42
Restrictions On Loss Carryovers	p. 42
Effective Statutory Response	p. 42
Corporate Divisions and Rearrangements
Corporate Divisions	p. 47
Distribution Of Stock - Tax-Free Spin-Off/Split-Off	p. 47
Shareholder Level Consequences	p. 47
The Defense	p. 47
(3) Both Corporations Engaged In Active Business	p. 47
Corporate Rearrangements	p. 49
Change In Capital Structure	p. 49
Recapitalization	p. 49
Change In Operating Entity	p. 49
F Reorganization	p. 49
Conversion To Limited Liability Company	p. 49
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