Chip and Dale Are Each 50% Owners of Tree Corporation

question 26

Essay

Chip and Dale are each 50% owners of Tree Corporation, a holding company. They have each held their stock since the company was formed five years ago. Tree's money is invested almost entirely in stocks, bonds, rental real estate, and land. All of the stocks are traded on the New York Stock Exchange except for 1,000 shares of Conifer Corporation stock. Conifer is privately held by 50 individuals. Last year, Conifer reported about $2 million in net income. During a meeting with Chip and Dale, you discover that they plan to liquidate Tree Corporation as soon as possible to avoid the personal holding company tax. What tax issues should Chip and Dale consider with respect to this liquidation?

---

Definitions:

Intubated

The insertion of a tube into the trachea to maintain an open airway, deliver oxygen, administer medications, or remove secretions.

Ventilator

A medical device that supports breathing by moving breathable air into and out of the lungs.

Sternal Notch

The visible dip at the top of the sternum between where the collarbones meet at the base of the neck.

Tracheostomy Tube

A tube inserted through a surgically created hole in the front of the neck and into the trachea to aid in breathing.