Liquidating distribution in excess of basis definition, recognition
The determination of whether a section liquidation is a loss importation transaction is made immediately after S makes the final liquidating distribution to P. This is based upon the theory that the original capital gain on the liquidation was overstated [see ArrowsmithU.
However, there are two situations where the S corporation statute must be protected. C Effect of basis determination under this paragraph b 3 - 1 Determination by reference to transferor's basis.
Part Examining Process
If the shareholder return reflects a significant IRC section gain or loss, the shareholder's basis computation needs to be examined. IRC section a allows for a series of distributions pursuant to a plan of liquidation to be treated as being part of a complete liquidation.
Because the importation properties, A1 and A2, were transferred in a loss importation transaction, the basis in each of the importation properties received is equal to its value immediately after FC distributes the property.
Also, a liquidation followed by reincorporation of the working assets could be a device to recognize losses. Some corporations adopt plans of liquidation which on the surface appear to meet the various statutory requirements for liquidations. The Board agreed to discuss the measurement of noncontractual liabilities e.
The requirements of IRC section stock are as follows: Although these receivables may not appear on the books, records of some type will exist to keep track of billings. For S corporations, two separate rules deal with the distribution of installment obligations in liquidation.