Van De Kamp, 040484 CAAGO, AGO 84-105
|Docket Nº:||AGO 84-105|
|Case Date:||April 04, 1984|
"(a) This section and Sections 24512 and 24513 shall not apply to any sale or exchange— "..................... "(3) Made by a corporation all of whose shareholders are not United States persons (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1954).The effect of this provision is to impose a capital gains tax on a liquidating corporation which has among its shareholders a non-United States person and which otherwise would have qualified for special tax treatment under section 24512, when a shareholder received the assets of the corporation on liquidation. The intent and purpose of those provisions
4In the case, however, of a corporation having both United States person and non-United States person shareholders (within the meaning of the preceding sentence) this section and Sections 24512 and 24513 shall apply only to the extent the gain or loss from the sale or exchange represents the United States persons' shareholder interest in the corporation."
"Current Law. "If a corporation makes a qualified liquidation wherein assets are distributed to shareholders, there is no tax on the exchange to the corporation. The basis of the property distributed is adjusted with respect to the shareholders so that when the shareholders dispose of the property they pay higher tax. However, if the shareholder is not a California resident, there is no jurisdiction over such person to impose a tax when the property is sold or exchanged. This results in revenue loss to the State. "Proposed Law. "Provides that in a liquidation situation the corporation must pay taxes on the gain attributable to property distributed to a...
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