This book analyses the problem of the thin corporation - how to avoid tax traps without giving up the benefits. It considers validity of original capitalisation and recapitalisation, interest deduction, bad debt treatment, stepped-up basis for assets transferred to corporation, recognition of gain or loss on transfer, and stockholder guaranteed loans. The leading representative cases are analysed according to the pivotal factors involved, showing in each case the amount and ratio of debt to stock. The cases are further studied from the standpoint of the ratio test, valuation of underlying assets, business purpose, and the intent test.
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THE Courts HAVE THE FINAL WORD
ANALYSIs of THE DEcisions
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2d Cir 6th Cir Actions Indicating Intent advances aff’d Amounts and Ratio arm's length bad debt deduction basis bona fide borrowed business bad debt business purpose capital contribution capital gain capital stock cash Commissioner common stock corporation's Court's Language creditor deben debentures debt securities Debt-to-Stock Amounts debtor-creditor relationship dividends Docket equity excess exchange factors Facts of Transaction Factual Situation Finding fair market value ferred Found by Court fully deductible guaranty holders hybrid securities indebtedness Intent as Found Interest deduction allowed investment issuance Kraft Foods loss Louis Rosenberg maturity date ment mortgage National Lead Co ness no-par stock nonbusiness bad debt notes paid par value parties partnership assets payable payer petitioner poration preferred stock principal ratio based realty repayment rev'd other pt stockholder loans stockholder's supra T.C. Memo Tax Court tax-free taxable TEST-Continued thin capitalization thin corporation tion transferred assets tures underlying assets value of underlying vances Warren H