Sales Having a Tax-Avoidance Purpose - Loss Recognition Is Restricted

question 21

Short Answer

Sales having a tax-avoidance purpose - Loss recognition is restricted where property is transferred to the corporation in a Sec.351 transaction or capital contribution after a date two years before the date that the corporation adopts a plan of complete liquidation.Tax avoidance is inferred in these situations unless the corporation uses the property in its trade or business.
A less-often encountered situation involves distributions or sales of a subsidiary corporation's stock.A corporation can elect under Sec.336(e)to treat the sale,exchange,or distribution of a subsidiary's stock as a disposition of all the subsidiary's assets,resulting in no gain or loss being recognized on the sale,exchange,or distribution of the stock.

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Definitions:

Antelope

A diverse group of typically horned, swift, and slender animals native to various regions in Africa and Eurasia.

Efficiency Wage

The theory that employers pay a higher wage than the market equilibrium to increase worker productivity and reduce turnover.

Labor

The effort by humans to produce goods or services in exchange for wages or salary.

Supply

The total amount of a product or service that is available to consumers, often influenced by price, production costs, and external factors.