Corporate Income Taxation

, by Kahn, Douglas A.; Lehman, Jeffrey S.

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

ISBN: 9780314256928 | 031425692X
Cover: Hardcover
Copyright: 12/1/2000

Rent

(Recommended)

$54.08

Term

Due

Price

Semester

Aug 2

$54.08

Quarter

Jul 19

$51.38

Short Term

Jun 21

$48.67

*This item is part of an exclusive publisher rental program and requires an additional convenience fee. This fee will be reflected in the shopping cart.
Buy New

Usually Ships in 3-5 Business Days

$73.88

Corporate tax laws have changed radically-most importantly due to the Tax Reform Act of 1986. This treatise is aimed at generalists who need a comprehensive overview of corporate tax doctrine and tax laws, specialists who need a way to synthesize the relevant authorities on a particular question, and students who want a discursive text to read along with their casebook. Discusses the crucial issues of corporate taxation. This book provides a comprehensive understanding of the field, enhance law student performance on exams, and also provides a useful guide for attorneys practicing in this area.

Preface

iii

Introduction

(60)

This Chapter

(1)

A. Historical and Doctrinal Overview

Some History

(2)

A Glance at the Structure of Current Doctrine

(11)

The Corporation's Tax Liability

(5)

The Shareholder's Tax Liability on Account of Distributed Corporate Earnings

(2)

The Shareholder's Tax Liability on Account of Gain from the Sale of Corporate Stock

(2)

Nonrecognition Treatment for Certain Formal Shifts in The Way a Business Enterprise is Conducted

(2)

B. Theoretical Overview

Forms of Investment

(5)

Incidence of the Corporate Income Tax

(3)

The Two-Tier Tax Structure

(3)

``Integration'' of Corporate and Shareholder Taxes

(8)

Shareholder-Level Dividends-Received Exclusions, Deductions, and Credits

(6)

Corporate-Level Dividends-Paid Deductions and Split-Rate Systems

(1)

``Full'' Integration (Shareholder Allocation)

(1)

Taxes, Asset Values, and Capitalization

(3)

Realization, Lock-In Effects, and Nonrecognition

(1)

Preferential Capital Gains Rates

(1)

Debt and Equity

(5)

Consequences of the Commitment to a Compromise System

(4)

The Path-Dependency of Tax Treatment

(2)

The Substantive Importance of Analytic Categories

(2)

C. Three Important Doctrinal Categories

What Is a Corporation?

(3)

Who Is the Owner of Property?

(3)

What Is Debt and What Is Equity?

(5)

Nonliquidating Distributions to Shareholders

(192)

A. Generally

Introduction

(1)

Dividend-Received Deduction for Corporate Shareholders

In General

(4)

Potential Abuse of the Dividend-Received Deduction

(2)

B. Distributions to Shareholders of Cash or Property (Other Than Stock or Stock Rights of the Distributing Corporation)

Amount Distributed

(2)

Definition of ``Dividend''

(5)

Disguised and Constructive Dividends

(11)

In General

(3)

Automatic Dividend Rule

(4)

Below-Market Interest Loans

(3)

Diversion of Corporate Assets

(1)

Earnings and Profits

(21)

In General

(5)

Effect of Discharge of Indebtedness on E and P

(1)

Computation of Depreciation for E and P Purposes

(5)

Effect of Distributions on E and P

101

(6)

Distribution of Corporation's Bonds and Debt Obligations

107

(1)

Amendments to § 312

107

(1)

Nonliquidating Distributions to 20 Percent Corporate Shareholder

108

(3)

Distributions to Shareholders in Excess of Earnings and Profits

111

(1)

Extraordinary Dividends to a Corporate Shareholder

112

(3)

Basis of Property Distributed to Shareholders

115

(1)

C. Distributing Corporation's Recognition of Gain or Loss

General Utilities Doctrine

116

(2)

Current Status of General Utilities

118

(4)

D. Distribution in Redemption of a Shareholder's Stock

Introduction

122

(2)

Attribution of One Individual's or Entity's Stock Ownership to a Different Individual or Entity

124

(6)

Redemptions Which are Treated as a Purchase of Stock Rather Than as a Dividend

130

(49)

Not Essentially Equivalent to a Dividend

131

(19)

Substantially Disproportionate Redemptions

150

(3)

Termination of Shareholder's Interest

153

(2)

Preclusion of Family Attribution

155

(8)

Waiver of Attribution by an Entity

163

(5)

Accrued Dividends

168

(1)

Partial Liquidations---Standards Set at the Corporate Level

168

(11)

Income Recognition by Distributing Corporation

179

(1)

Redemption of Stock: Effect on Corporation's Earnings and Profits

179

(8)

Extraordinary Dividend Resulting from Stock Redemption or Partial Liquidation

187

(1)

Distribution in Redemption of Stock Which was Included Within the Gross Estate of a Decedent for Federal Estate Tax Purposes

188

(8)

Redemption of Stock of One Shareholder as a Dividend to Other Shareholders

196

(2)

Constructive Redemption---The Sale of Corporate Stock Either to a Subsidiary Corporation or to a Sister Corporation

198

(20)

Brother-Sister Corporations

199

(8)

Intragroup Sales

207

(1)

Mirror Subsidiaries

208

(3)

Parent-Subsidiary Corporations

211

(7)

Overlap with § 351

218

(1)

E. Distributions of Stock or Stock Rights of the Distributing Corporation

Introduction

218

(1)

Stock Dividends

219

(12)

Historical Background Prior to the 1954 Code

219

(2)

The 1954 Code

221

(2)

The Status of § 305 After the 1969 Act Amendments

223

(7)

Stripped Bonds and Preferred Stock

230

(1)

Stock Dividend Equivalents

231

(5)

Treatment of a Taxable Stock Dividend

236

(2)

Basis of Stock Received as a Tax-Free Dividend Under § 305(a)

238

(2)

Preferred Stock Bail-Outs and Section 306 Stock

240

(13)

Definition of Section 306 Stock

242

(3)

Disposition of Section 306 Stock

245

(5)

Exemption from Section 306 Treatment

250

(2)

Priority of Section 303

252

(1)

Liquidation of a Corporation and Taxable Sales of Corporate Businesses

253

(130)

A. Complete Liquidation

Introduction

255

(2)

The Liquidating Corporation's Recognition of Gain or Loss

257

(9)

Shareholder's Treatment in Ordinary Liquidation

266

(2)

Reincorporations

268

(4)

Liquidation of a Controlled Subsidiary Corporation

272

(23)

Requisites for Nonrecognition for Parent Corporation

273

(4)

Minority Shareholders

277

(2)

Taxation of the Liquidating Subsidiary

279

(3)

Partial or Full Satisfaction of Subsidiary's Indebtedness to its Parent

282

(7)

Purchase of Subsidiary's Debt by Parent

289

(3)

Parent's Indebtedness to its Subsidiary

292

(1)

Planned Termination of Parent Corporation

293

(2)

B. Taxable Purchase and Sale of a Corporate Business

Sale of Corporate Assets Pursuant to a Liquidation

295

(11)

Nonrecognition for Asset Sales Prior to 1986

297

(2)

Repeal of Nonrecognition for Liquidating Sales

299

(1)

Installment Sales by Liquidating Corporations

300

(6)

Allocation of Purchase Price

306

(1)

Sales of Stock

306

(74)

Replacement of Old § 334(b)(2) and of the Kimbell-Diamond Rule

308

(1)

The Operation of § 338

309

(9)

P Purchases Control of Stock of T

318

(10)

§ 338 Election

328

(1)

Liability for the Tax and Reporting of Gain

328

(2)

Section 338(h)(10) Election

330

(8)

New T's Basis in its Assets

338

(10)

The Consistency Rules

348

(30)

Usefulness of a § 338 Election

378

(1)

Treatment of Certain Liquidations for Tax Avoidance

378

(1)

Information Report Required

379

(1)

Sale of Assets---Allocation of Price

380

(3)

Collapsible Corporations

383

(22)

A. Function and Operation of Collapsible Provisions

Nature of the Problem

384

(2)

Effect of Collapsible Characterization

386

(1)

Definition of Collapsible Corporation and Consideration Whether Subsequent to 1986 it is Possible for a Corporation to be Collapsible

387

(7)

Presumption of Collapsibility

394

(1)

B. Exceptions to Collapsible Treatment

Section 341(d)

394

(1)

Section 341(e)

395

(4)

Section 341(f)

399

(3)

C. Examples

Illustrations

402

(3)

Retention of Corporate Earnings

405

(72)

A. General Statement

Generally

407

(1)

B. Personal Holding Company Tax

Introduction

408

(2)

Personal Holding Company: Definition

410

(23)

Gross Income

411

(1)

Ordinary Gross Income (OGI)

411

(1)

Adjusted Ordinary Gross Income (AOGI)

412

(2)

Personal Holding Company Income

414

(17)

Stock Ownership Test

431

(2)

Taxation of Personal Holding Companies

433

(9)

Undistributed Personal Holding Company Income (UPHC Income)

433

(2)

Dividends Paid Deduction

435

(7)

Incentive to Liquidate

442

(1)

Liquidation of a Personal Holding Company

442

(2)

Significance of the Personal Holding Company Tax

444

(1)

C. Accumulated Earnings Tax

Introduction

444

(3)

Tax Avoidance Purpose

447

(4)

Calculation of Accumulated Taxable Income

451

(6)

Calculation of Accumulated Earnings Credit

457

(1)

Reasonable Needs of the Business

458

(12)

In General

458

(3)

Working Capital

461

(3)

Reasonably Anticipated Needs of the Business

464

(2)

Section 303 Redemption Needs

466

(1)

Excess Business Holding Redemption Needs

466

(1)

Availability of Existing Capital

467

(3)

Burden of Proof

470

(2)

Stock Redemption Agreements

472

(5)

Small Businesses

477

(134)

A. Generally

Introduction

481

(1)

B. Subchapter S

Introduction

482

(2)

Terminology for Distinguishing Types of Corporations

484

(2)

Eligibility

486

(35)

In General

486

(4)

Qualified Subchapter S Subsidiary (QSSS)

490

(1)

Trusts as Shareholders

491

(9)

Nominal Stock Ownership

500

(1)

One Class of Stock Requirement

501

(1)

Hybrid Stock

502

(2)

Straight Debt

504

(2)

Current Treatment of Hybrid Stock

506

(3)

Call Options

509

(2)

Convertible Debt

511

(1)

Restricted Stock

511

(1)

Buy-Sell Arrangements

512

(3)

Differences in Amounts or Timing of Actual Distributions

515

(6)

Election

521

(2)

Taxable Year

523

(1)

Effect of a Subchapter S Election

524

(7)

In General

524

(1)

Pass-Through of Tax Items

525

(1)

Tax Returns and Consistency Requirement

526

(1)

Reallocation of Tax Items Among Members of a Shareholder's Family

527

(1)

Adjustments of Corporation's Tax Items

527

(1)

Carryforward and Carryback of Tax Items From or To an S Corporation's Taxable Year

528

(1)

Characterization of Pass-Through Tax Items

529

(1)

Pass-Through of Built-In Gains

529

(2)

Pass Through of Passive Investment Income

531

(1)

Earnings and Profits

531

(1)

Shareholder's Basis in S Corporation's Stock and Debt Obligation

532

(11)

Adjustments to Shareholder's Basis

532

(5)

Order of Adjustments and Effect on Shareholder's Deduction of Loss and Treatment of Receipt of Corporate Distributions

537

(3)

Shareholder's Guaranty of Third-Party Loan to Corporation

540

(3)

Limitation on Shareholders' Deductions

543

(8)

In General

543

(2)

Post-Termination Transition Period

545

(2)

Worthless Stock

547

(1)

At Risk and Passive Activity Loss Limitations

548

(2)

Other Limitations

550

(1)

Distributions Received From an S Corporation

551

(11)

In General

551

(1)

Accumulated Adjustments Account

551

(5)

Post-Termination Transition Period

556

(1)

Distribution of Appreciated Property

556

(1)

Distribution of Pre-1983 Accumulated E and P

557

(1)

Illustration

558

(4)

Termination of Election

562

(8)

Revocation

562

(1)

New Shareholder

562

(1)

Foreign Income

563

(1)

Cessation of Qualification as S Corporation

563

(1)

New Election After Termination

564

(1)

S Termination Year

564

(2)

Tax Treatment of S Termination Year

566

(2)

Passive Investment Income Causing Termination of S Election

568

(2)

Invalid Election

570

(1)

Taxation of Passive Investment Income

570

(4)

Taxation of Built-in Gains

574

(21)

Fringe Benefits

595

(1)

Sale of S Corporation's Stock

595

(5)

Acquisition of S Corporation's Carryover of Disallowed Losses

600

(2)

C. Losses on Small Business Stock (§ 1244)

Normal Treatment of Losses

602

(1)

Operation of § 1244

603

(2)

Qualification for § 1244 Treatment

605

(2)

Repeal of Written Plan Requirement

606

(1)

Definition of ``Small Business Corporation''

606

(1)

Usefulness

607

(1)

D. Gain from Qualified Small Business Stock (§ 1202)

Exclusion from Gross Income

608

(1)

Limitation on Amount of Exclusion

608

(1)

Qualified Small Business

609

(1)

Qualified Small Business Stock

609

(2)

Organization of a Corporation

611

(80)

Introduction

613

(1)

The Basic Rules Apart From Section 351

613

(3)

An Overview of Section 351

616

(10)

Nonqualified Preferred Stock

619

(6)

Business Purpose Requirement

625

(1)

``Persons in Control Immediately After the Exchange''

626

(10)

The Transferor Must Transfer ``Property''

636

(2)

The ``Exchange'' Requirement

638

(3)

Transfers ``Solely in Exchange for Stock''

641

(3)

The Receipt of ``Boot,'' Part I (In General)

644

(4)

Controlled Corporation's Recognition of Gain or Loss

648

(1)

The Receipt of Boot, Part II (Corporate Assumption of Transferor Liability and Netting of Obligations)

648

(21)

Tax-Avoidance Purpose

651

(3)

Liabilities in Excess of Basis

654

(14)

Controlled Corporation's Deduction When Liability Is Paid

668

(1)

The Receipt of Boot, Part III (Corporate Obligation to Shareholder)

669

(6)

Overriding Section 351

675

(16)

Statutory Overrides

675

(1)

Depreciation recapture---Sections 1245 and 1250

675

(1)

Related Party Transactions---Section 1239

676

(1)

Reallocations by the Commissioner---Section 482

677

(1)

Anti-Bailout Rule I---Section 304

678

(2)

Anti-Bailout Rule II---Section 306

680

(1)

Accounting Method Changes---Sections 446 & 481

681

(1)

Reorganizations---Section 368

682

(1)

Non-Statutory Overrides

683

(1)

Assignment of Income

683

(2)

The Tax Benefit Rule

685

(3)

The Business Purpose Test and the Court Holding Doctrine

688

(3)

Corporate Divisions

691

(132)

Introduction

693

(1)

Forms of Corporate Divisions

694

(1)

Nonrecognition Treatment and the Potential for Tax Avoidance

695

(3)

An Overview of Section 355

698

(8)

``Distributes''

706

(1)

``Stock or Securities''

707

(3)

Distribution of a Controlling Interest

710

(3)

The ``Device'' Test

713

(3)

The Five-Year Active Trade or Business Requirement

716

(18)

Active Conduct of a Trade or Business

717

(3)

Active Conduct of a Trade or Business Through a Subsidiary

720

(1)

The Five-Year Requirement

721

(1)

Division of an Integrated Business and the Problem of ``Expansions''

722

(2)

Division of an Old, Longstanding Business

724

(2)

Division Following a Recent Expansion

726

(4)

Active Business ``Immediately After the Distribution''---Corporate Divisions Followed by Corporate Acquisitions

730

(4)

Nonstatutory Requirements---Business Purpose and Continuity of Interest

734

(13)

Business Purpose

735

(4)

Continuity of Interest

739

(8)

Excess Securities Boot, Stock Boot, Nonqualified Preferred Stock Boot, and Interest Substitute Boot

747

(12)

Excess Securities Boot

747

(3)

Stock Boot

750

(2)

Nonqualified Preferred Stock Boot

752

(7)

Stock Rights and Warrants

759

(1)

Tax Consequences for Shareholders When Boot is Distributed

759

(21)

Section 356---General Rules

760

(1)

Section 356---Amount and Characterization of Gain

760

(12)

Section 356---Special Problems in Split-Offs With Boot

772

(3)

Section 356---Testing for Dividend Equivalency

775

(5)

Basis Calculation

780

(8)

Intragroup Distributions

788

(1)

Taxation of the Distributing Corporation

788

(35)

Not Pursuant to a Reorganization

789

(2)

Pursuant to a Reorganization

791

(1)

Gain Recognition Required by § 355(d) and (e)

792

(1)

Section 355(d)

793

(13)

Section 355(e)

806

(15)

Earnings and Profits

821

(2)

Reorganizations

823

(142)

Introduction

826

(1)

What Is At Stake?

827

(8)

Tax Consequences of Mergers and Acquisitions That Do Not Qualify as Reorganizations

829

(1)

Asset Acquisitions That Do Not Qualify as Reorganizations

830

(1)

Stock Acquisitions That Do Not Qualify as Reorganizations

831

(2)

Tax Consequences of Mergers and Acquisitions That Qualify as Reorganizations

833

(2)

The Historical Evolution of Reorganizations---Picturing the Development of Extrastatutory Glosses

835

(26)

Continuity of Proprietary Interest

837

(11)

Continuity of Business Enterprise

848

(13)

Other Judicial Doctrines

861

(1)

An Overview of the Statutory Requirements of Reorganizations Today---Picturing the Development of Legislative Categories

861

(12)

Divisive Reorganizations

862

(1)

Acquisitive Reorganizations

863

(10)

Nondivisive, Nonacquisitive Reorganizations

873

(1)

A Closer Look at Statutory Reorganizations

873

(81)

Simple A Reorganizations: Two-Party Mergers

875

(3)

Simple B Reorganizations: Two-Party Acquisitions, Solely Voting Stock for Stock

878

(16)

Simple C Reorganizations: Two-Party Acquisitions, Mostly Voting Stock for Substantially All the Assets

894

(10)

Post-Reorganization ``Drop-Downs'' and § 368(a)(2)(C)

904

(4)

Triangular B Reorganizations

908

(4)

Triangular C Reorganizations

912

(6)

Triangular A Reorganizations: Forward Triangular Mergers Under 368(a)(2)(D)

918

(3)

Triangular A Reorganizations: Reverse Triangular Mergers Under 368(a)(2)(E)

921

(5)

Triangular Reorganizations; Effect on Parent's Basis in the Acquiring Corporation's Stock

926

(2)

Use of Contingent and Escrowed Stock, and Other Shareholder Agreements

928

(3)

Acquisitive D Reorganizations

931

(5)

Bankruptcy (G) Reorganizations

936

(2)

Nonacquisitive Form Changes (F Reorganizations)

938

(2)

Recapitalizations (E Reorganizations)

940

(3)

Exchange of stock for stock

943

(4)

Exchange of bonds for stock

947

(1)

Exchange of bonds for bonds

948

(1)

Exchange of stock for bonds

949

(2)

The Reorganization as Sword: Combating Liquidation-Reincorporation Transactions

951

(3)

Gain Recognition in Qualifying Reorganizations

954

(11)

Boot in a Qualifying Reorganization

955

(6)

General Utilities Repeal (The Distribution of Appreciated Assets) in the Context of a Qualifying Reorganization

961

(4)

Acquisition or Retention of Tax Attributes

965

(96)

A. Generally

Introduction

967

(8)

B. Acquisition of Tax Attributes

Introduction

975

(2)

Liquidation of Subsidiary Corporations

977

(1)

Acquisitive Reorganizations

977

(1)

Triangular Reorganizations

978

(2)

Taxable Years and Carrybacks

980

(2)

F Reorganizations

982

(1)

Net Operating Losses

983

(6)

Earnings and Profits

989

(9)

C. Statutory Limitations

Introduction

998

(1)

The § 382 Limitation on Net Operating Loss Carryforwards and on Built-In Losses

999

(43)

The § 383 Limitation on Carryovers of Net Capital Losses and of Certain Tax Credits

1042

(4)

Limitation on Offsetting Preacquisition Losses and Credits of One Corporation Against Another's Built-In Gains

1046

(6)

Acquisitions Made to Evade or Avoid Income Tax---§ 269

1052

(9)

Multiple Corporations

1061

(72)

A. Generally

Introduction

1063

(1)

B. Consolidated Returns

Introduction

1063

(2)

Qualifications

1065

(3)

Acquisition of a Corporation Solely or Primarily for a Tax Purpose

1068

(2)

Election

1070

(3)

Taxable Year and Accounting Method

1073

(1)

Consolidated Taxable Income

1074

(15)

Computation

1074

(1)

Intercompany Transactions

1075

(2)

Matching Rule

1077

(6)

Acceleration Rule

1083

(3)

Intercompany Distributions

1086

(1)

Application of § 267(f)

1087

(2)

Earnings and Profits and Investment Adjustments

1089

(12)

Earnings and Profits

1090

(5)

Investment Adjustments to Stock Basis

1095

(6)

Excess Loss Account

1101

(1)

Group Structure Change

1102

(3)

Built-in Losses and Loss Carryovers

1105

(9)

Built-in Losses

1105

(6)

Consolidated Net Operating Loss Deduction

1111

(3)

Limitation on Deduction of SRLY Carryover Losses

1114

(3)

Application of §§ 382 and 383 to a Consolidated Group

1117

(1)

C. Limitation on Tax Benefits for Related Corporations

Introduction

1117

(3)

Allocation of Income and Deductions Under § 482

1120

(5)

Other Statutory Restrictions

1125

(4)

Transfers and Acquisitions Made for the Purpose of Securing a Tax Benefit

1129

(2)

Conclusion

1131

(2)

Table of Cases

1133

(12)

Table of Internal Revenue Code Sections

1145

(24)

Index

1169

Please wait while the item is added to your bag...

FREE SHIPPING

Amazon no longer offers textbook rentals. We do!

Corporate Income Taxation

Summary

Table of Contents

Supplemental Materials