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liquidating corporation-42

Some of the answer to that question depends on timing.

Section 453(a)(2) of the Code was repealed by the Ticket to Work and Work Incentives Improvement Act of 1999.

Since the General Utilities doctrine was repealed back in 1986, installment sales have helped shareholders to manage their personal level of gain recognition.

Section 453(h) allows a shareholder who receives certain installment notes in exchange for stock in a Section 331 liquidation to treat the receipt of the payments under the note (rather than the receipt of the note) as payment for the stock.

That Code provision had barred accrual method taxpayers from using the installment sale method.

Moreover, the repeal was retroactive, surely adding insult to injury. After some debate about the use of installment method and why it was important, Congress reinstated this Code provision in the Installment Tax Correction Act of 2000.

CAN YOU USE THE INSTALLMENT METHOD ON CORPORATE LIQUIDATIONS By Robert W.

Wood Can accrual method taxpayers use the installment sale method?

Except as otherwise provided in this section or section 337, gain or loss shall be recognized to a liquidating corporation on the distribution of property in complete liquidation as if such property were sold to the distributee at its fair market value. (ii) read as follows: “For purposes of clause (i), any property described in clause (i)(I) acquired by the liquidating corporation during the 2-year period ending on the date of the adoption of the plan of complete liquidation shall, except as provided in regulations, be treated as part of a plan described in clause (i)(II).” Subsec. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.