When a corporation repurchases shares of its stock from investors, do individual shareholders generally prefer the repurchase to be treated as a dividend for tax purposes or do they prefer it to be treated as a sale? What do corporate shareholders prefer? Why?
Answer to relevant QuestionsWhich of the following scenarios will qualify under Section 351 as a nontaxable corporate formation? For those that do not qualify, what requirement of Section 351 do they violate? a. Ginger, Mary Ann, and Mrs. Howell form ...What are the tax benefits and costs of a transaction that changes the depreciable basis of an asset? What are the disadvantages of effecting a change in the basis of all of the firm’s assets either by their sale, followed by a complete liquidation, or by a stock purchase, along with an election to treat the stock purchase ...What are the main tax considerations to a purchaser in the sale of a target’s stock when the target is an S corporation? Under what general circumstances is a tax- free acquisition structure preferable? Consider specifically the tax attributes and tax status of the target corporation and the target’s shareholders. Also consider the tax ...
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