Intermountain Lumber Company V. Commissioner Sarah K. Bragg June 18, 2007.

Slides:

Advertisements

Similar presentations

Corporate Taxation: Formation, Reorganization, and Liquidation

Advertisements

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Reporting and Interpreting Investments in Other Corporations Chapter 12.

Shareholders’ Equity Sid Glandon, DBA, CPA Associate Professor of Accounting The University of Texas at El Paso.

© The McGraw-Hill Companies, Inc., 2001 Irwin/McGraw-Hill Chapter 11 Reporting and Interpreting Owners’ Equity.

Cash, Short-term Investments and Accounts Receivable

Reporting and Interpreting Owners’ Equity Chapter 11 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA CHAPTER.

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 11 Reporting and Interpreting Stockholders’

Financial and Managerial Accounting Wild, Shaw, and Chiappetta Fourth Edition Wild, Shaw, and Chiappetta Fourth Edition McGraw-Hill/Irwin Copyright © 2011.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Reporting and Interpreting Owners’ Equity Chapter 11.

Financial and Managerial Accounting John J. Wild Third Edition John J. Wild Third Edition McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies,

11- 1 INCOME AND CHANGES IN RETAINED EARNINGS Chapter 12.

Reporting and Interpreting Owners’ Equity Chapter 11 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

1 Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 9 Nontaxable Exchanges McGraw-Hill/IrwinCopyright © 2009 by The.

Noncurrent Liabilities Chapter 9. Noncurrent Liabilities Noncurrent liabilities represent obligations of the firm that generally are due more than one.

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved Chapter Twelve: Income and Changes in Retained Earnings.

McGraw-Hill/Irwin 14-1 © The McGraw-Hill Companies, Inc., 2005 Long-Term Liabilities Chapter 14.

McGraw-Hill/Irwin 14-1 © The McGraw-Hill Companies, Inc., 2005 Long-Term Liabilities Chapter 14.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Operating Decisions and the Income Statement Chapter 3.

Copyright © 2007 Prentice-Hall. All rights reserved 1 The Statement of Cash Flows Chapter 16.

Corporate Taxation: Nonliquidating Distributions

Ch. 1 - Introduction to Financial Management  2000, Prentice Hall, Inc.

FORECLOSURE & MORTGAGE DEBT FORGIVENESS WHAT ARE THEY? WHY ARE WE CONCERNED? IRS Pub 4702 IRS Pub 970.

1 Electronic Presentations in Microsoft® PowerPoint® Prepared by Nathalie Johnstone University of Saskatchewan CHAPTER 12: Organization, Capital Structures,

Chapter 33 Limited Liability Companies and Special Business Forms

Chapter 8 Corporate Formation, Reorganization, and Liquidation Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Financial & Managerial Accounting The Basis for Business Decisions FOURTEENTH EDITION Williams.

Chapter 5 Property Transactions: Capital Gains and Losses 1.

Income Tax concepts: General Concepts Ability to pay concept

Financing Decisions - 1 FINANCING DECISIONS Creditors and Investors.

Section 1: Financing Through Bonds

©The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin Chapter 15 Corporate Taxation “Corporations don’t pay taxes, they collect them.” -- Paul H. O’Neill.

©2004 Prentice Hall Business Publishing Introduction to Financial Accounting, 3e by Werner/Jones4 - 1 Chapter 4 Income Statement and Statement of Owners’

15-1 Prepared by Coby Harmon University of California, Santa Barbara Intermediat e Accounting Prepared by Coby Harmon University of California, Santa Barbara.

Corporations Chapter 12. Corporation Characteristics Is a legal entity, distinct and separate from the individuals who create and operate it. It may acquire,

1 Chapter 9 Stockholders’ Equity. 2 Learning Objective 1 Explain the advantages and disadvantages of a corporation.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA CHAPTER.

ACCOUNTING STANDARD-9 REVENUE RECOGNITION. PURPOSE PURPOSE Recognising revenue arising in the course of the ordinary activities of the enterprise.

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Profit and Changes in Retained Earnings Chapter 12.

12-1 Contributions to Corporations in Exchange for Stock Section 351 No gain/loss recognized on transfers of property to corporation in exchange solely.

Copyright © 2007 Prentice-Hall. All rights reserved 1 Statement of Cash Flows Chapter 13.

13-1 Corporate Acquisitions  Acquisition form  Asset Acquisition  Direct acquisition of selected assets of target corporation  Merger with target corporation.

8-1 Nontaxable Exchanges  An exchange of property involves the disposition of an asset and acquisition of another (non-cash) asset  An exchange of property.

BUSINESS ORGANIZATIONS. SOLE PROPRIETORSHIPS What is the most common form of business? Sole Proprietorship, which is a business run by one person; smallest.

Profit & Loss Account ACCOUNTING & FINANCE. Introduction and Key Definitions A statement recording all a firm ’ s revenues and costs within a past trading.

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Operating Decisions and the Income Statement Chapter 3.

17-1 Corporate Divestitures Occur when a corporation disposes of a subsidiary or separate line of business Same 4 alternative structures:  Taxable asset.

Statement of Cash Flows Chapter Twelve McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter-10-1A- Property- Acquisition Howard Godfrey, Ph.D., CPA Professor of Accounting ©Howard Godfrey-2015.

Chapter 5 Property Transactions: Capital Gains and Losses.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

16-1 Types of Acquisitive Reorganizations  Type A reorganizations - statutory mergers and consolidations, forward and reverse triangular mergers  Type.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 18 Corporate Taxation: Nonliquidating Distributions.

Chapter 12 The Choice of Business Entity McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

8-1 Compensation and Tax Planning  Recall the three types of tax planning:  Converting income from one type to another  Shifting income from one time.

McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Chapter 11 Dispositions of.

General Utilities & Operating Co. v. Helvering Supreme Court of the United States, U.S. 200, 56 S.Ct. 185 Todd Harris June 20, 2007 Tax 8020.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Accounting For Equity Transactions Chapter Eleven.

McGraw-Hill/Irwin Copyright (c) 2003 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Dispositions of Equity Interests.

Corporate Formation, Reorganization, and Liquidation

Corporate Formation, Reorganization, and Liquidation

Corporation Equity Transactions

Corporate Formation, Reorganization, and Liquidation

MANAGEMENT DECISIONS AND FINANCIAL ACCOUNTING REPORTS

Corporate Formation, Reorganization, and Liquidation

Taxation of Individuals and Business Entities

Presentation transcript:

Intermountain Lumber Company V. Commissioner Sarah K. Bragg June 18, 2007

Transfer of Property for Stock Judge Wilson United States Tax Court, 1976 Examines Section 351 Issue: Court determination of “control” as is requisite in applying Section 351.

S & W Sawmill, Inc. (1 of 3) Shook and Wilson partnered to build a saw mill. Wilson co-guaranteed a $200,000 loan to provide financing. Shook and Wilson created S & W Sawmill, Inc. and created a contract with the following stipulations regarding ownership of stock:

S & W Sawmill, Inc. (2 of 3) 1. Dee Shook is to sell to Milo E. Wilson 182 shares of stock in S & W for the agreed price of $500 per share. 2. Wilson is to pay Shook for said stock, interest only until 1969 at which time principal payments of $15,000 per year are to commence.

S & W Sawmill, Inc. (3 of 3) 3. As each principal payment is made the proportionate number of shares of stock are to be transferred on the corporate records and delivered to Wilson. Shook also executed an irrevocable proxy allowing Wilson voting rights in all the stock.

Intermountain Lumber Co. On July 1, 1967 Intermountain Lumber Co. bought all outstanding shares of S & W stock. An agreement was made to pay Shook $91,000 more than Wilson.

The Problems Arise Shook: my transferred assets into S & W were non-taxable under Section 351. Intermountain: the transfers were taxable because of the lack of pertinent “control” Intermountain wished to use the higher FMV basis for depreciation purposes.

The Court’s Decision Shook and Wilson intended to consummate the sale of the said stock. Shook relinquished the legal right to retain stock. Therefore he did not have the requisite “control” of company to take advantage of Section 351.

Conclusion Section 351 – No Gain or Loss to be recognized if property is transferred for stock and that person is then in control. Simply a transfer of form. Shook’s transaction was a “Sale” and not simply a transfer of form.