Category: International; Corporations; Sales
& Exchanges Copyright 1998, The Tax Resource Group. All rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com Taxpayer is a U.K. corporation owned approximately 90% by U.S. persons, each of whom owns at least 10%. Taxpayer has earnings and profits of approximately $1 million and highly appreciated inventory worth approximately $7 million. Taxpayer would like to liquidate over a period of about three years with the shareholders enjoying long-term capital gain on the dissolution. As we discussed, Section 1248 was clearly designed to prevent the treatment the taxpayer desires. I suggested selling the stock prior to sale of the inventory as a possible solution that could be further explored; however, as I understand it, that is not feasible as a practical matter. Outside of that option, I was unable to discover a way avoid Section 1248 treatment with respect to the dissolution of this taxpayer. |
