Modified treatment of transfers to creditors in certain divisive reorgs.
As amended by AJCA 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.
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" for purposes of the nonqualified preferred stock rules, changes the method for calculating estimated taxes 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 to acquisitive D reorganizations.
FROM KIRSTEN SIMPSON, WASHINGTON, DC
|Printer friendly Cite/link Email Feedback|
|Publication:||The Tax Adviser|
|Date:||Jan 1, 2005|
|Previous Article:||Estimated taxes for Sec. 338(h)(10) transactions.|
|Next Article:||Nonqualified preferred stock.|