Tackling unsettled issues in the liquidation of an insolvent subsidiary
Common issues regarding the liquidation of insolvent subsidiaries in a separate return context are explored. When an insolvent subsidiary is liquidated, the parent corporation would not receive any amount in exchange for the common stock of the subsidiary. Efforts to fall within Sections 332 and 337...
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| Veröffentlicht in: | Taxes 2009-10, Vol.87 (10), p.15 |
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| creator | Lau, Paul C Soltis, Sandy Stapleton, Nora |
| description | Common issues regarding the liquidation of insolvent subsidiaries in a separate return context are explored. When an insolvent subsidiary is liquidated, the parent corporation would not receive any amount in exchange for the common stock of the subsidiary. Efforts to fall within Sections 332 and 337 by avoiding a subsidiary's insolvency before liquidation are subject to IRS's scrutiny and challenge. The parent corporation may experience uncertainty on the timing of the deduction and the character of the loss with respect to worthless stock and uncollected debt. Similarly, the insolvent subsidiary may be faced with unresolved tax treatments of debt discharge and debt assumption by the parent corporation. Guidance is needed so the tax consequences to all involved are more easily determined. |
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When an insolvent subsidiary is liquidated, the parent corporation would not receive any amount in exchange for the common stock of the subsidiary. Efforts to fall within Sections 332 and 337 by avoiding a subsidiary's insolvency before liquidation are subject to IRS's scrutiny and challenge. The parent corporation may experience uncertainty on the timing of the deduction and the character of the loss with respect to worthless stock and uncollected debt. Similarly, the insolvent subsidiary may be faced with unresolved tax treatments of debt discharge and debt assumption by the parent corporation. 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Soltis, Sandy ; Stapleton, Nora</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-g1688-d05e19553e282b3e35503a76cfbaedc9b4a96ee34f2c21876b925e0e93cf8ecc3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2009</creationdate><topic>Bad debts</topic><topic>Capital assets</topic><topic>Capital losses</topic><topic>Debt cancellation</topic><topic>Income taxes</topic><topic>Insolvency</topic><topic>Intangible assets</topic><topic>Internal Revenue Code</topic><topic>Liquidation</topic><topic>Organization dissolution</topic><topic>Preferred stock</topic><topic>Section 332</topic><topic>Section 337</topic><topic>Shareholder voting</topic><topic>Stockholders</topic><topic>Subsidiaries</topic><topic>Subsidiary corporations</topic><topic>Tax courts</topic><topic>Tax returns</topic><topic>Taxation</topic><toplevel>online_resources</toplevel><creatorcontrib>Lau, Paul C</creatorcontrib><creatorcontrib>Soltis, Sandy</creatorcontrib><creatorcontrib>Stapleton, Nora</creatorcontrib><collection>Gale Business: Insights</collection><collection>Business Insights: Essentials</collection><collection>Gale OneFile: LegalTrac</collection><collection>ProQuest Central (Corporate)</collection><collection>Accounting & Tax Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>Accounting & Tax Database (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>Research Library (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Accounting, Tax & Banking Collection</collection><collection>ProQuest Central Essentials</collection><collection>eLibrary</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Accounting, Tax & Banking Collection (Alumni)</collection><collection>Business Premium Collection (Alumni)</collection><collection>ProQuest Central Student</collection><collection>Research Library Prep</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>Research Library</collection><collection>Research Library (Corporate)</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>Taxes</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Lau, Paul C</au><au>Soltis, Sandy</au><au>Stapleton, Nora</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Tackling unsettled issues in the liquidation of an insolvent subsidiary</atitle><jtitle>Taxes</jtitle><date>2009-10-01</date><risdate>2009</risdate><volume>87</volume><issue>10</issue><spage>15</spage><pages>15-</pages><issn>0040-0181</issn><abstract>Common issues regarding the liquidation of insolvent subsidiaries in a separate return context are explored. When an insolvent subsidiary is liquidated, the parent corporation would not receive any amount in exchange for the common stock of the subsidiary. Efforts to fall within Sections 332 and 337 by avoiding a subsidiary's insolvency before liquidation are subject to IRS's scrutiny and challenge. The parent corporation may experience uncertainty on the timing of the deduction and the character of the loss with respect to worthless stock and uncollected debt. Similarly, the insolvent subsidiary may be faced with unresolved tax treatments of debt discharge and debt assumption by the parent corporation. Guidance is needed so the tax consequences to all involved are more easily determined.</abstract><cop>Riverwoods</cop><pub>CCH, Inc</pub></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0040-0181 |
| ispartof | Taxes, 2009-10, Vol.87 (10), p.15 |
| issn | 0040-0181 |
| language | eng |
| recordid | cdi_proquest_reports_206073138 |
| source | HeinOnline Law Journal Library |
| subjects | Bad debts Capital assets Capital losses Debt cancellation Income taxes Insolvency Intangible assets Internal Revenue Code Liquidation Organization dissolution Preferred stock Section 332 Section 337 Shareholder voting Stockholders Subsidiaries Subsidiary corporations Tax courts Tax returns Taxation |
| title | Tackling unsettled issues in the liquidation of an insolvent subsidiary |
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