Section 331 Liquidation

1 1966 except for certain liquidations to which section 332 of this title applies.

Section 331 liquidation. 88 272 do not apply if there is a complete liquidation of such corporation and if the distribution of all the property under such liquidation occurs before jan. The current reduction of the maximum tax rate on capital gains and on qualifying dividends to 15 through 2012 somewhat mitigates the traditional preference for a sale or exchange transaction e g a sec. Under section 331 a 2 26 uscs 331 a 2 it is provided that amounts distributed in partial liquidation of a corporation shall be treated as in full or part payment in exchange for the stock.

If section 331 26 uscs 331. There are two exceptions found in sections 332 and 338. Ruling the irs plr clarifies that a deemed liquidation from the conversion of a corporate subsidiary to an llc making a subsequent check the box election to be treated as a de may qualify for non recognition under.

If a liquidation does not qualify under section 332 section 331 will generally govern and gain or loss will be recognized. For this purpose the term partial liquidation shall have the meaning ascribed in section 346 26 uscs 346. 331 liquidation payment over a dividend.

Under section 331 a 1 it is provided that amounts distributed in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock. The corporate shareholder s tax treatment is governed by the general rule of section 331. 1 1987 any transaction described in section 338 of this title for which the acquisition date occurs after dec.

Amendment by section 631 e 2 of pub. For a complete liquidation section 331 a 1 provides for exchange treatment and section 1101 c requires the recognition of gain or loss on the sale or exchange of property. The critical issue for tax planning is whether the assets distributed are considered property under irc section 336 and whether the corporation owns them.

The shareholder who treats the fair market value of the property as received in exchange for his or her stock also recognizes a gain irc section 331 a. G 3 of this section the amendments made by section 225 of pub. 99 514 applicable to any distribution in complete liquidation and any sale or exchange made by a corporation after july 31 1986 unless such corporation is completely liquidated before jan.