IRS scrutinizes basis studies.
Based on the TTE article and subsequent events, the following points seem relevant:
* Although the regulations contemplate the determination of stock basis at or near the time of a transaction, it is never too late to conduct a Revenue Procedure 81-70 study.
* The determination of target stock tax basis in many, if not most, stock swaps is based on information received (or accessible) from the previous stock owners of the acquired company; the longer a company has to wait to retrieve and analyze the information, the more difficult it may be.
* The IRS is scrutinizing the methodologies used to perform basis studies to assess compliance with the requirements of Revenue Procedure 81-70. Comments from IRS officials and practitioners suggest that some studies are viewed as more in compliance with the rules than others. Basis studies are not all created equal.
TEI understands that the IRS will soon issue a notice soliciting comments on the revenue procedure (including whether it should be revised). When the IRS request is issued, the Institute's Federal Tax Committee will consider whether TEI should file a submission and, if so, the scope and direction of any comments. If you have received an IDR about your company's basis study or otherwise wish to contribute to any forthcoming TEI project, please send an email message to firstname.lastname@example.org.
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|Title Annotation:||Recent Activities|
|Date:||Jan 1, 2004|
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