Transfers to Controlled Corporations and Related P

Transfers to Controlled Corporations and Related Party Losses Based on the lecture, address the following:

 Create a scenario where the transfer of property to a controlled corporation under Section 351 of the Internal Revenue Code (IRC) results in the taxation to the transferor. Evaluate the fairness of the taxation of the transaction to the transferor. Provide a tax-planning strategy to prevent taxation of similar transfers.
• Section 267 of the IRC disallows a deduction on losses realized on the sale of property and a deduction for accrued expenses between a corporation and a controlling shareholder. Generally Accepted Accounting Principles (GAAP) does not include this disallowance provision. Create an argument for allowing a loss on a sales transaction between a controlled corporation and shareholder when the transaction includes an independent appraisal and the loss is similar to losses incurred in arm- length transactions. Provide an example of allowing such loss to support your argument.
 

Discussion:
"Corporate Liquidations, Taxable Acquisition Transactions, and Nontaxable Reorganizations" Please respond to the following:

• 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).
 
• Go to the Tax Almanac Website, located at http://www.taxalmanac.org/index.php/Tax_Research_Resources, or use the Internet and Strayer databases to research Section 336 of the IRC, Treasury Regulations 1.336, 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.
 
 
• 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 IRC Section 338 liquidation election for a target corporation.
2 pages