MGMT 127B Lecture 7: Lectures on 10:31 and 11:7
Document Summary
General rules: corporation income (section 336) Usually yes you can take a loss: shareholder: You can recognize gain or loss in income (section 331), usually capital. The basis in received property is at fmv (section 334a) Superseding rules applicable to parent-subsidiary liquidations: general approach. Shareholder (parent) also cannot take any income, and basis in received property is carried over (previous basis: section 338 election (this requires a purchase of 80% of the subsidiary"s stock within a 12 month period) Basis in received property= basis in stock of subsidiary as adjusted. Subsidiary: the parent has to own at least 80% of the other company in order to call it a subsidiary- they are viewed as economically joined together at this point. Gains are recognized, losses are not recognized gains and losses are recognized. Dividend income is equal to the market value of the cash and property received to the extent of the corporation"s current or accumulated.
