Questions from Federal Taxation

Q: What is a stock redemption? What are some reasons for redeeming

What is a stock redemption? What are some reasons for redeeming stock? Why are some redemptions treated as sales and others as dividends?

Q: Field Corporation redeems 100 shares of its stock from Andrew for $

Field Corporation redeems 100 shares of its stock from Andrew for $10,000. Andrew’s basis in the shares is $8,000. Explain possible alternative tax treatments of Andrew’s receiving the $10,000.

Q: What conditions must be met for a redemption to be treated as

What conditions must be met for a redemption to be treated as a sale by the redeeming shareholder?

Q: Explain the purpose of the attribution rules in determining stock ownership in

Explain the purpose of the attribution rules in determining stock ownership in a redemption. Describe the four types of attribution rules that apply to redemptions.

Q: Abel, the sole shareholder of Ace Corporation, has an opportunity

Abel, the sole shareholder of Ace Corporation, has an opportunity to purchase the assets of a sole proprietorship for $50,000 in cash. Ace has a substantial E&P balance. Abel does not have sufficient...

Q: Why does a redemption that qualifies for sale treatment under Sec.

Why does a redemption that qualifies for sale treatment under Sec. 303 usually result in the shareholder’s recognizing little or no gain or loss?

Q: Under what circumstances does a corporation recognize gain or loss when it

Under what circumstances does a corporation recognize gain or loss when it distributes noncash property in redemption of its stock? What effect does a redemption distribution have on the distributing...

Q: What is a preferred stock bailout? How does Sec. 306

What is a preferred stock bailout? How does Sec. 306 operate to prevent a shareholder from realizing the otherwise available tax benefits of a preferred stock bailout?

Q: Explain the tax consequences, to both the corporation and a shareholder

Explain the tax consequences, to both the corporation and a shareholder-employee, of an IRS determination that a portion of the compensation paid in a prior tax year is unreasonable. What steps can th...

Q: What factor(s) would the IRS likely consider to determine

What factor(s) would the IRS likely consider to determine whether the transfer of a liability to a corporation in a Sec. 351 exchange was motivated by a business purpose?