Effect: The election out will be effective for all of T's
transfers (current-year and future) to B and to any and all other trusts (whether they exist in 2006 or are created in a later year), unless and until T terminates the election out.
After E learned that T's
tax liabilities remained unsatisfied, M conferred a "gift" on employees whom T was unable to pay.
338(h)(10) election is a deemed liquidation of "old" T into P immediately after the deemed sale of "old" T's
1504(a)(2)) defines a QSP in terms of P acquiring 80% or more of T's
332 liquidation are the location and timing of gain on the NB asset, the reformation of T's
stock basis and the separation of E&P from the business that generated such earnings.
As a result, Example 2 appears to be a taxable acquisition of T's
assets by S, even though it is economically equivalent to Example 1.
case, the settlement payment resulted from A's breach of contract with B.
The proceeds of any revolving credit loans made pursuant to the second agreement had to be used for (1) refinancing T's
existing debt (including any associated fees and expenses) and (2) T's
general working capital needs and other corporate purposes.
The IRS maintains that the stock's fair market value (FMV) substantially exceeded the amounts reported on T's
and H's gift tax returns.
T recognizes gain or loss on the "deemed sale" just as if T had sold its assets to E The deemed sale is treated as occurring after T's
stock has been sold, and is included in a one-day deemed-sale return that P must file as owner of new T; see Sec.