TAX 9866 Lecture Notes - Lecture 16: Section 301 Of The Trade Act Of 1974, Capital Asset, Ordinary Income
Document Summary
Chapter 5: corporate tax- redemptions and partial liquidations. If you qualify for redemption under 302; sale and exchange treatment. We did see proposed regs dealing w/ documentation requirements under 385 were repealed (be cognizant) Difficult to comply w/ documentation requirement > intercompany debt instrument. Irs had proposed withdrawing regulation, one of the things is political landscape. Current admin promised to roll back government regulations. Just because something called debt or equity doesn"t make it so (substance over form) Generally unconditional promise to pay not tied to earnings of company = debt has to be paid back. Whereas equity tied to earnings of company/ mandatorily convertible into some kind of equity] No sale or exchange treatment, then back at 301 distribution. 5 tests under 302 to test for redemption. Qualifying under 302: get to treat transaction (sale of shares to corporation) as sale or exchange transaction = capital gain most likely [long term= held longer than the year]
