Under the federal consolidated return regulations, NIHC was required to defer recognition of the gain from the distribution for federal income tax purposes and, instead, recognize the gain over the 15-year period in which N2HC amortized the value of the license agreement under IRC § 197. Approximately $186 million per year in deferred § 311(b) gain was reported by NIHC in the Nordstrom federal consolidated returns for 2002, 2003 and 2004. NIHC, on its 2002 and 2003 Maryland tax returns, originally included the $186 million per year of deferred IRC § 311(b) gain in Maryland modified income. NIHC then sought refunds, arguing that the deferred gain was reported in error.

IRC Sec. 355(b)(2)(C). IRC Sec. 311(b). IRC Sec. 302(a) and Sec. 302(b)(3).

It is important not to lose sight of the tax consequences to the corporation that makes an in-kind distribution of property to its shareholders: the corporation is treated as having sold such property for an amount equal to its fair market value. IRC Sec. 311(b). Subject to the corporation’s having sufficient surplus as a matter of state law; also subject to any bank covenants restricting the distribution of earnings.

Echoes of Pope & Talbot, which considered the valuation of an in-kind distribution of property by a corporation to its shareholders. For purposes of determining the corporation’s gain from the deemed sale of the property under IRC Sec. 311(b), the corporation argued, in effect, that it distributed multiple fractional interests which should be valued accordingly. The Court disagreed, finding that the gain realized by the corporation should be determined by reference to the property as a whole, while the income realized by the shareholders would be based upon the value of the fractional interest each received.

P.L. 99-514 (the “’86 Act”). IRC Sec. 311(b). Loss is not recognized but see IRC Sec. 267(a) regarding complete liquidations.

ev. Rul. 59-60. The Court did not make any findings as to value. In general, S corporations are required to use the calendar year for tax purposes. Reported to him by LP on a Schedule K-1. Form 1040, Schedule E, Part II. Attributable to its liquidating distribution (and deemed sale per IRC Sec. 336) of the value-discounted FLP interests, and passed through to the shareholder under IRC Sec. 1366.Query why there was no mention of the IRS’s standard position in estate/gift tax matters that interests in a partnership funded with marketable securities did not merit much in the way of valuation discounts.Query also why there was no discussion of the Pope & Talbot decision, 162 F.3d 1236 (9th Cir. 1999), where a corporation made a non-liquidating distribution of limited partnership interests in a single partnership to its shareholders. The corporation had valued each partnership unit as a minority interest (a discounted value). The court disagreed. The units had to be valued (for purposes of IRC Sec. 311) as if sold in their entirety, as one; otherwise, the FMV of the underlying assets would not be accurately reflected.Finally, query why no mention was made of IRC Sec. 336(d), which denies loss recognition to a liquidating corporation on certain distributions to related persons. On Form 1120S, U.S. Income Tax Return for an S Corporation. Because it claimed to be a day-trader? Taxpayer’s accountant prepared S Corp’s return with the assistance of Adviser, who directed the accountant to report the transactions as gross receipts and cost of goods sold, and who even provided the discounts and other information used to compute those amounts. On Form 1065, U.S. Return of Partnership Income. The Court recognized that there is “near-total overlap between the latter two factors.” The year at issue preceded the effective date of IRC Sec. 7701(o), which codified the doctrine. Just to recap: Taxpayer transferred substantial assets to S Corp, their wholly-owned corporation, which then transferred t

[xxvi] The 80 percent limitation is reinstated for taxable years beginning after December 31, 2020.[xxvii] See IRC Sec. 311(b), Sec. 336, Sec. 355.[xxviii] IRC Sec. 461(l). In the case of a partnership or an S corporation, the provision applies at the partner or shareholder level.

We assume that neither the mixing bowl rules of IRC Sec. 704(c)(1)(B) and Sec. 737, nor the disguised sale rules of IRC Sec. 707, are applicable. IRC Sec. 311(b). IRC Sec. 1374.

See below. IRC Sec. 301. Of course, we are assuming that the distribution was not a redemption of a shareholder’s shares of stock in the corporation that qualified for exchange treatment under IRC Sec. 302. IRC Sec. 311(b). IRC Sec. 355(a)(1)(D).

C” status. IRC Sec. 301, Sec. 302, Sec. 1(h). The 3.8% surtax will also apply. IRC Sec. 1411.Where the C corporation is not expected to make dividend distributions to its shareholders (as where it is reinvesting its after-tax profits), the S corporation seems “expensive” by comparison because the S corporation’s profits are taxable to the shareholders at a maximum federal rate of 37% whether or not distributed to them.But once you start talking about making distributions to the shareholders of the corporation, the C corporation’s advantage disappears. Specifically, the combined federal rate of 21% on corporate-level profit, plus the 20% federal rate on C corporation dividends to individual shareholders and the 3.8% federal surtax on individual shareholders, is almost 40%. IRC Sec. 1368. IRC Sec. 1367 and Sec. 1366. Beware, however, the corporation’s distribution of property in-kind, which is treated as sale of the property by the corporation that may result in the recognition of gain. IRC Sec. 311(b). Capital gain. Carried over from years during which it was a C corporation, or “inherited” from a C corporation that the S corporation acquired in a transaction described in IRC Sec. 381; for example, a tax-free merger under IRC Sec. 368(a)(1)(A). IRC Sec. 1368(c). In very general terms, the AAA is a corporate account that reflects the S corporation’s income and gain that have already been taken into account by its shareholders in determining their individual taxable income, but that have not yet been distributed by the corporation to the shareholders. “ Query whether an F-reorganization (basically, an inversion) may help here. IRC Sec. 1371(e). Not property in-kind; probably not a note. IRC Sec. 1371(e). IRC Sec. 1377(b).https://www.taxlawforchb.com/2015/01/from-s-to-c-to-s-or-but-i-was-already-taxed-on-that/ which discusses CCA 201446021. Section 1371(f). On Nov. 4, 2019, the IRS issued proposed regulations under this provision. REG-131071-18. IRC Sec. 1367. IRC Sec. 1366(d). The lo