P.R. Laws tit. 13, § 10109
(a) General rule. — No income tax shall be levied on or collected from the transferor or transferee with regard to the total liquidation of an exempted business which has obtained a decree under this part, on or before the expiration date of the decree, provided the following requirements are met:
(1) All property distributed in liquidation was received by the transferee in accordance with a liquidation plan on or before the expiration date of the decree, and
(2) the distribution upon liquidation by the transferor, whether in a lump sum or in installments, was made by the transferor in cancellation or in [full] redemption of its entire capital stock.
The basis of the transferee in the property received in liquidation shall be equal to the adjusted basis of the exempted business in said property immediately before the liquidation.
A corporation or a partnership holding shares in a partnership that is an exempted business shall in turn be deemed to be an exempted business for the purposes of this section.
(b) Liquidation of transferors with revoked decrees. — If the decree of a transferor is revoked before its expiration, the surplus industrial development income accrued on the date the revocation becomes effective may be transferred to the transferee at any later time, subject to the provisions in subsection (a) of this section, except in cases of mandatory revocation under § 10111(c)(2) of this title, whereby the accrued surplus industrial development income shall be taxable as provided in the revocation order.
(c) Liquidations after the expiration of the decree. — After the decree of the transferor has expired, the latter may transfer to the transferee the accrued surplus industrial development income earned during the effectiveness of the decree, subject to the provisions of subsection (a) of this section.
(d) Liquidation of transferors with exempt and nonexempt activities. — In case the transferor carries out exempt and nonexempt activities, the latter may transfer to the transferee the surplus industrial development income accrued under this part and the property intended for industrial development under this part as part of its total liquidation, subject to the provisions of subsection (a) of this section. The accrued surplus that is not industrial development income and the property that is not intended for industrial development shall be distributed according to the provisions of §§ 8006 et seq. of this title, known as the “Puerto Rico Internal Revenue Code”.
History —Dec. 2, 1997, No. 135, § 10, eff. Jan. 1, 1998.