Question 1: From the e-Activity, evaluate the appropriateness of the techniques used and the common issues pursued by the IRS in corporate liquidations and dissolutions. Create an argument to defend the client if the IRS pursues the assignment of income doctrine or the clear reflection of income doctrine on a cash-basis corporation, as reflected in the Examining Officers Guide (EOG).
- Outline a plan of liquidation for a client that liquidates two (2) years after incorporation by transferring loss property under IRC Section 351. The plan of liquidation should be defensible against the IRS in an audit that challenges the plan as having a tax-avoidance purpose. Analyze the consequences in an IRS audit of a subsequent reincorporation after a corporate liquidation and recognition of losses.
Question 2: IRC Section 338 allows a deemed sale election generating immediate taxation to the target corporation and a stepped-up or stepped-down basis to the price paid by the acquiring corporation for the target corporation stock plus liabilities on the deemed sale. Examine at least one (1) benefit of a Section IRC 338 liquidation election for a target corporation. Create a situation which demonstrates a favorable Section IRC 338 liquidation election for a target corporation.
- Identify one (1) consequence of a nontaxable reorganization, and offer an alternative to eliminate the negative effect of the identified consequence.
the answer are to be 3 to 4 lines. this is not a paper just discussion
Go to the Tax Almanac Website, located here, or use the Internet and Strayer databases to research Section 306 of the IRC, Treasury Regulations 1.306, and related judicial decisions. Focus on the appropriateness of the techniques used and the common issues pursued by the IRS in corporate liquidations and dissolutions. Be prepared to discuss. link below
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