Modified treatment of transfers to creditors in certain divisive reorgs.In the context of a divisive di·vi·sive adj. Creating dissension or discord. di·vi  sive·ly adv.di·vi transaction under Sec. 355, the distributing corporation often transfers property to a controlled corporation in exchange for the latter's stock, in a reorganization exchange under Sec. 368(a)(1)(D). Sec. 361(b)(3), prior to amendment, permitted the distributing corporation to receive, in exchange for the transferred property, money or other property from the controlled corporation without recognizing gain on the exchange, provided the distributing corporation transferred such money or other property to its creditors. Sec. 361(b)(3), prior to amendment, did not limit the amount of money or other property that could be received by the distributing corporation for transfer to its creditors. New Law As amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by AJCA AJCA American Jobs Creation Act of 2004 (US) AJCA American Jersey Cattle Association AJCA Association of Juvenile Compact Administrators AJCA All Japan Cooks Association AJCA Alabama Junior Cattlemen’s Association Section 898, Sec. 361(b)(3) limits the amount of money plus the fair market value of other property that a distributing corporation, in the context of a reorganization under Secs. 368(a)(1)(D) and 355, may transfer to its creditors without gain recognition under Sec. 361(b), to the aggregate basis of the assets contributed to the controlled corporation. This provision does not take into account any pre-existing basis that the distributing corporation may have had in the controlled corporation's stock. Effective Date This amendment applies to transfers of money or other property, or liabilities assumed, in connection with a reorganization occurring on or after Oct. 22, 2004. Corporate formation and organization In the corporate arena, the AJCA affirms Treasury's authority to issue consolidated return regulations that treat corporations differently than they would be treated in a separate return context. It also refines the definition of "preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. " for purposes of the nonqualified preferred stock rules, changes the method for calculating estimated taxes Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. for Sec. 338(h)(10) transactions and modifies the treatment of transfers to creditors in certain divisive reorganizations. Finally, it also makes Sec. 357(c) inapplicable in·ap·pli·ca·ble adj. Not applicable: rules inapplicable to day students. in·ap to acquisitive D reorganizations. FROM KIRSTEN SIMPSON Simp·son , Sir James Young 1811-1870. British obstetrician and a founder of gynecology. He is also known for introducing the use of chloroform as an anesthetic. , WASHINGTON, DC |
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