Taxation of Corporate Transactions Flashcards

A set of vocabulary flashcards covering shareholder and corporate tax treatments for §351, reorganizations, asset sales, stock sales, redemptions, and liquidations.

Shareholder Gain in §351

No loss recognized. Gain recognized only on boot or when liabilities > basis (§357(c)).

Shareholder Stock Basis Formula in §351

$$\text{Old basis} + \text{gain recognized} - \text{boot received}$$

Shareholder Gain in Taxable Stock Sale

$$\text{Amount realized} - \text{stock basis} = \text{capital gain or loss}$$

Shareholder Gain in Reorganization

Gain recognized only on boot; loss never recognized.

Shareholder Stock Basis in Reorganization

$$\text{Old basis} - \text{boot received} + \text{gain recognized}$$

Shareholder Treatment in Redemption

Sale or exchange if §302 tests are met; otherwise treated as a dividend.

Shareholder Treatment in Partial Liquidation

Individuals receive sale or exchange treatment; Corporations receive dividend treatment.

Corporate Gain in §351

Corporation recognizes no gain or loss on property received.

Corporate Basis in §351

$$\text{Transferor's basis} + \text{gain recognized by transferor}$$

Corporate Gain in Taxable Asset Sale

$\text{FMV} - \text{basis} = \text{gain or loss}$ (both recognized).

Corporate Basis in Taxable Asset Sale

Buyer gets $\text{FMV}$ basis.

Corporate Gain in Reorganization

No gain or loss on stock exchanges. Gain recognized on appreciated boot property; no loss.

Corporate Basis in Reorganization

$$\text{Carryover basis} + \text{shareholder gain recognized}$$

Corporate Gain on Distributions

Gain recognized on appreciated property; no loss.

Corporate E&P Reduction

Reduce $\text{E\&P}$ by $\text{FMV}$ of property distributed.

Corporate Gain in Redemption

Gain on appreciated property; no loss (same as distributions).

Corporate Treatment in Partial Liquidation

Gain on appreciated property; no loss; $\text{E\&P}$ reduced by $\text{FMV}$.

Buyer Basis in Asset Purchase

$$\text{FMV}$$

Buyer Basis in Stock Purchase

Purchase price.

Gain Recognition in Asset Sale

$\text{FMV} - \text{basis}$ (gain or loss).