Rev. Rul. 70-106: § 331 applies to liquidation after 25% redemption

In Rev. Rul. 99-6, the IRS provides that certain transfers of partnership interests cause termination of a partnership.

Rev. Rul. 70-106: § 331 applies to liquidation after 25% redemption

In Rev. Rul. 99-6, the IRS provides that certain transfers of partnership interests cause termination of a partnership.

Citations: Rev. Rul. 70-106; 1970-1 C.B. 70

Rev. Rul. 70-106

Minority shareholders owned twenty-five percent of the capital stock of corporation X. The remaining seventy-five percent of the capital stock of X was owned by Corporation Y. Y desired to liquidate X in a transaction to which section 332 of the Internal Revenue Code of 1954 would apply in order that Y would recognize no gain on the transaction. The minority shareholders agreed to have their stock of X redeemed. Following the distribution to the minority shareholders, Y owned all the stock of X. Y then adopted a formal plan of complete liquidation of X and all of the remaining assets of X were distributed to Y.

Held, all of the shareholders of X received a distribution in liquidation under the provisions of section 331 of the Code, and the gain is recognized to Y and gain or loss is recognized to the minority shareholders under section 331 of the Code. The liquidation fails to meet the eighty percent stock ownership requirements of section 332(b)(1) of the Code since the plan of liquidation was adopted at the time Y reached the agreement with the minority shareholders and at such time, Y owned seventy-five percent of the stock of X.

Product heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Get Started

Related Diagrams

10 Min Read

Rev. Rul. 82-150: Deep-in-the-money options

In Rev. Rul. 82-150, the IRS holds that a sale of a deep-in-the-money option was, in substance, not an option but a completed sale of the referenced stock for purposes of the foreign personal holding company rules.

Explore Diagrams
10 Min Read

Rev. Rul. 70-224: Cause to be directed; § 368(a)(2)(C)

Rev. Rul. 70-224: It is held that the transaction in the instant case is an acquisition by X, solely in exchange for its voting stock and the assumption of Z's liabilities, of substantially all of the properties of Z, and is, therefore, a reorganization within the meaning of section 368(a)(1)(C) and section 368(a)(2)(C) of the Code. The fact that all the assets of Z were transferred directly to Y rather than through X to Y does not affect the reorganization.

Explore Diagrams
10 Min Read

Rev. Rul. 2001-46, Sit. 2: Acquisition merger & upstream merger collapsed

Rev. Rul. 2001-46, Sit. 2: Under the facts presented, if, pursuant to an integrated plan, a newly formed wholly owned subsidiary of an acquiring corporation merges into a target corporation, followed by the merger of the target corporation into the acquiring corporation, the transaction is treated as a single statutory merger of the target corporation into the acquiring corporation that qualifies as a reorganization under section 368(a)(1)(A).

Explore Diagrams