Capital asset status of stock received in an acquisitive reorganization now more certain
Article Abstract:
Section 306 stock is stock other than common stock, and while Section 306 stock is often designated as preferred stock, it is all stock that permits bailouts of earnings. Internal Revenue Code Section 306 regulates bailouts of corporate earnings, although the elimination of long-term capital gains rates has eliminated interest in such strategies. However, the classification of stock under Section 306 continues to have important ramifications, including: redemptions of Section 306 stock resulting in dividends to shareholders reduces payor's earnings and profits; conversions of capital gains to ordinary gains by Section 306 reduces stockholders' deductions of capital losses; and disposal of Section 306 stock will postpone or deny recovery of the stocks' basis.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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The incapacitated client may need more than traditional tax and estate planning advice
Article Abstract:
Accountants and other professionals working for an incapacitated client should be careful about ascertaining the client's mental and physical state before having the client enter into legally binding documents or signing documents, in order to avoid liability for malpractice. Practitioners need to have a knowledge of state laws governing the incapacitated, and should be aware of the eligibility requirements of state and federal programs when conducting financial and estate planning. Practitioners who suspect a lack of mental capacity or competency on the part of their client should secure written medical opinions as to an incapacitated client's mental capacity before allowing the client to make important financial and tax decisions.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
User Contributions:
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