A Short & Happy Guide to Corporate Taxation (Short & Happy Guides) 9781647087906, 1647087902

Table of contents :
Chapter 1 Preface
Chapter 2 Models of Corporate Taxation, a Brief History Lesson, and the Current State of Affairs
A. The Classical Model
B. Integration
C. The Evolution of Integration
Chapter 3 Indirect Taxation and Incidence
Chapter 4 Dividends as Income
A. Post-Acquisition Earnings
B. Pre-Acquisition Earnings
C. Phellis
D. The Proper Procedure: Bifurcation
Chapter 5 Dividends Received Deduction
A. Basics
B. Distribution of Pre-Acquisition Earnings
C. Congressional Reactions
1. Section 246(c)
2. Section 1059
D. Debt-Financed Portfolio Stock
Chapter 6 Sale of Shares
A. Introduction
B. Bootstrap Sales
1. The Plan (Avoiding Double Taxation)
2. The Man (the Commissioner’s Position)
3. The Proverbial Fan (the Cases Hit the Courts)
Chapter 7 Individual Shareholders
A. Bifurcation
B. Congressional Response
Chapter 8 Dividends and Distributions From Capital
A. Introduction
B. Distribution of Capital
C. Earnings and Profits—Definition
D. Current and Accumulated E&P
E. Current E & P
1. The “Nimble Dividend”
2. “The Rule of Imaginary Time”
F. Accumulated E&P
1. No Current E&P
2. Positive Current E&P
3. Negative Current E & P
G. Effects of Distributions on E&P
Chapter 9 Distribution of Property
A. Introduction
B. General Utilities and Its Aftermath
C. Distribution of Property Encumbered by a Debt
1. From the Perspective of the Corporation
2. From the Perspective of the Shareholders
D. Effect of Property Distributions on Earnings and Profits
1. FMV Exceeds Adjusted Basis
2. Adjusted Basis Exceeds FMV
3. Encumbered Property
Chapter 10 Disguised Distributions
A. Not Every Transfer Is a Distribution
B. Why the Designation Matters
C. Classifying the Payment
Chapter 11 Stock Distributions
A. Introduction
B. Case Law
1. Eisner v. Macomber
2. “Common on Preferred”
3. “Preferred on Preferred”
4. “Preferred on Common”
5. Summing Up the Case Law
C. Section 305
D. Quantification
E. Basis
F. Stock Dividends as a Tax Planning Tool
G. Section 306: Tainting the Stock
H. Section 306: What’s Really Going On?
Chapter 12 Redemptions
A. Introduction
B. Why Does It Matter?
1. Basics
2. Section 1059(e)(1)(A)
3. Earnings and Profits
4. Which Treatment Is Better?
C. Attribution Rules
1. Statutory Framework
2. First Attribution Rule: Family Members
3. Second Attribution Rule: From an Entity
4. Third Attribution Rule: To an Entity
5. Fourth Attribution Rule: Option Holders
6. Operating Rules
a. Basic Operating Rule
b. First Exception: “Adam and Eve”
c. Second Exception: To and From an Entity
D. Classifying the Redemption
E. Substantially Disproportionate Redemptions
1. The 80% Requirements: Non-Voting Shares and Non-Common Shares
a. Non-Voting Shares
b. Non-Common Shares
2. The 50% Requirement
3. Series of Redemptions
F. Complete Termination
1. Avoiding Family Attribution
2. Splitting Stock Among Family Members
3. Prohibited Interests
a. Creditors
b. Lessors
c. Service Providers
4. Prohibited Interests of Related Parties
G. Redemptions Not Essentially Equivalent to a Dividend
1. Potential Coalitions
2. Indirect Ownership
3. Family Hostility
H. Partial Liquidations
1. Partial Liquidation—Definition
2. Qualified Trade or Businesses
3. Why and Wherefore
I. Redemptions Through Related Corporations
1. Step One: Control
2. Step Two: Applying the § 302 Tests
3. Hold On, I’m a Bit Confused
4. Step Three: Earnings and Profits
Chapter 13 Complete Liquidations
A. Liquidation of a Corporation That Is Not a Subsidiary
1. Tax Consequences to the Shareholders
2. Tax Consequences to the Corporation
B. Liquidation of a Subsidiary
1. Distributions to Minority Shareholders
2. Distributions to the Parent Corporation
Chapter 14 Section 351
A. Introduction
B. Group Transfers
C. Mechanics of § 351
D. Property Containing Unrealized Loss
E. Avoiding § 351
F. Boot
1. Basis
a. Basis of the Shares in the Hands of the Transferor
b. Basis of the Property in the Hands of the Corporation
2. Assumption of Liabilities
a. General
b. Tax Avoidance
c. Escaping Through an IOU
Chapter 15 Corporate Divisions
A. Introduction and Terminology
B. Tax Consequences of a Division (Without Boot)
1. Basic Statutory Provisions
2. Corporate-Level and Shareholder-Level Taxation
3. Gregory
a. Judicial Response
b. Congressional Responses
C. Requirements
1. Business Purpose
a. Shareholder Purpose
b. Transfers Following a Divisive D Reorganization
c. Alternative Arrangements
2. Continuity of Proprietary Interest (COPI)
3. Active Trade or Business (ATB)
a. Active Conduct
b. Separate Affiliated Group
c. Five-Year Requirement
d. Trade or Business Acquired Indirectly
e. Division and Expansion of an Existing Trade or Business
4. Distribution of All the Stocks and Securities
D. Boot
1. From the Perspective of the Shareholder
a. Recognizing Gain and Loss
b. Characterizing Gain
c. Basis
2. From the Perspective of the Corporation
E. Divisions in the Nature of Sale
1. Section 355(d)
2. Section 355(e)
Chapter 16 Reorganizations
A. Overview
B. Non-Statutory (“Common Law”) Requirements
1. Continuity of Proprietary Interest (COPI)
2. Continuity of Business Enterprise (COBE)
3. Business Purpose
C. Reorganizations, From A to G
D. “A” Reorganizations
1. Definition
2. Divisive Mergers
3. Tax Consequences of an “A” Reorganization
E. “B” Reorganizations
1. Definition
2. “Solely for. . .Voting Stock”
3. Creeping “B” Reorganizations
4. Tax Consequences of “B” Reorganizations
F. “C” Reorganizations
1. Definition
2. “Substantially All”
3. “Solely for. . .Voting Stock”
a. Assumption of Liabilities
b. Other Boot
4. Liquidation of the Target Corporation
5. Tax Consequences of a Type “C” Reorganization
G. Triangular Reorganizations and Drop-Downs
1. Drop-Downs
2. Triangular Reorganizations: General
3. Triangular B Reorganizations
a. Qualifying as a Triangular B Reorganization
b. Tax Consequences of a Triangular B Reorganization
4. Triangular C Reorganizations
a. Qualifying as a Triangular C Reorganization
b. Tax Consequences of a Triangular C Reorganization
5. Forward Triangular Mergers
a. Qualifying as a Forward Triangular Merger
b. Tax Consequences of a Forward Triangular Merger
6. Reverse Triangular Merger
a. Qualifying as a Reverse Triangular Merger
b. Tax Consequences of a Reverse Triangular Merger
H. Other Reorganizations
1. Acquisitive “D” Reorganizations
2. Type “E” Reorganizations
3. Type “F” Reorganizations
4. Type “G” Reorganizations
I. Tax Consequences of Boot
1. From the Perspective of T’s Shareholders
a. Recognition of Gain
b. Characterization of Gain
c. Effect of Boot on Basis
2. From the Perspective of T
a. Exchange of Property in the Reorganization
b. Disposition of Property Following the Exchange
3. From the Perspective of P
Chapter 17 Carryover of Tax Attributes
A. Introduction
B. Tax Attributes
C. Which Corporation Inherits the Tax Attributes?
D. Blending the Tax Attributes of the Target and Acquiring Corporations
1. Earnings and Profits
a. In General
b. Year of Liquidation or Reorganization
2. Net Operating Losses
Chapter 18 Restrictions on Use of Tax Attributes
A. Introduction
1. Corporate Identity and Trafficking in Tax Attributes
B. Section 382: Net Operating Losses
1. Ownership Change
2. Consequences of an Ownership Change
a. Eliminating the NOL: Continuity of Business Enterprise
b. Section 382 Limitation: Deferring Deduction of the NOL
c. Section 382 Limitation: Anti-Stuffing Rules
d. Section 382 Limitation: Built-In Gains and Losses
C. Section 383
1. Net Built-In Capital Losses
2. Credits
D. Section 269
E. Section 384
Chapter 19 Final Words