Transitory cash is recognized - shareholder status is not
Article Abstract:
IRS Letter Ruling 9648052 appears to suggest that the IRS found nothing wrong with a series of transactions designed to separate a shareholder from a corporation via a shareholder loan to a newly created controlled subsidiary. Introducing cash into a corporate distribution under IRC section 355 can result in denial of tax-free status for the reorganization. The IRS appeared to accept the loan transaction as a permissible means of financing the distribution to the shareholder. This very taxpayer-favorable ruling does not appear to be supported by precedent.
Publication Name: Journal of Corporate Taxation
Subject: Law
ISSN: 0094-0593
Year: 1997
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Letter Ruling 9605012: what liquidation?
Article Abstract:
IRS Private Letter Ruling 9605012 appears to confirm a departure from the liquidation-reincorporation doctrine that was once an issue of primary concern to the IRS. The IRS approved IRC section 332 treatment for a spin-off that involved transfer of assets to two tiers away from the distributing parent corporation. The IRS addressed the issue of the reincorporation of assets in two subsidiaries but did not raise the liquidation-reincorporation issue. The transfer may have been accepted because the distributing corporation did not retain any assets.
Publication Name: Journal of Corporate Taxation
Subject: Law
ISSN: 0094-0593
Year: 1996
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The triple bootstrap spin-off
Article Abstract:
IRS Letter Ruling 9446023 has authorized a spin-off that satisfied the business purpose requirement only because of a prior transaction that created the need for the spin-off. The distributing holding company acquired controlling interest in a subsidiary by using a stock-for-stock exchange that qualified as a type B reorganization. The distributing company then used the control of the subsidiary as the reason for spin-off of stock in that subsidiary, satisfying section 355(b).
Publication Name: Journal of Corporate Taxation
Subject: Law
ISSN: 0094-0593
Year: 1995
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