Stock sale did not negate continuity of interest
Article Abstract:
The Penrod case resulted in a tax court ruling in which it was held that stockholders of an acquired company did not recognize gain on the date of acquisition because they did not intend at the time to sell the stock they gained from the acquiring company. The IRS had contended that the exchange and eventual sale of stock was a part of the step-transaction doctrine. The court reviewed three tests to decide whether or not to invoke the step-transaction doctrine: binding commitment, end result, and interdependence. Taxpayers in Penrod were stockholders in firms that owned McDonald's restaurant franchises. Since the majority shareholder never asked for cash, the taxpayers continued working for McDonald's after the acquisition, and because the initiative in the acquisition was taken by McDonalds, the court concluded that the taxpayers were entitled to treat the merger as a reorganization.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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Interest on taxes may be reduced, recalculated or even waived, depending on the circumstances
Article Abstract:
Tax liabilities that are not paid by the payment due date incur interest under Section 6601. Exceptions to the imposition of interest are provided for if a tax deficiency is asserted by the tax payer, a waiver of restriction on an assessment is executed by taxpayer, or if notice and demand is not made by the Internal Revenue Service within 30 days following the execution of waiver. Tax planning can minimize interest on taxes through proper planning and by appealing to administrative remedies. Taxpayers can minimize interest payments to the IRS by carefully reviewing their interest liability and the circumstances in which is arose in order to affect an abatement of a portion of the interest.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Periods for underpayment of interest determined
Article Abstract:
Recent IRS rulings concerning interest on underpayments of taxes are discussed, and examples are presented. In the event a tax return is filed on time and taxes due are satisfied by a credit for overpayment on the subsequent year's tax return which is also filed on time, the due dates of the two returns, without regard to extensions, become the basis for computing interest on the underpayment. Interest can only be charged when tax is both due and unpaid.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1989
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