Boot given a shareholder in a merger will now generally be taxed as a capital gain

Article Abstract:

The Supreme Court ruled in the Clark decision that most boot distributions, which result from corporate reorganizations and provide gains to shareholders, should be taxed as capital gains rather than as ordinary income. The decision will affect similar reorganizations, so it will be important to plan for such distributions. Planning guidelines are presented for the following areas: target corporation; acquiring corporation; shareholders; earnings and profits; partial liquidations; installment method; and safe harbors.

Accounting and auditing, Corporations, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation)

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Should the qualified plan distribution election be allowed to expire unexercised?

Article Abstract:

The excise tax on qualified plan benefits can still be limited under an election which is available to certain individuals under Section 4980A. Section 4980A and its provisions are described, showing that ambiguities in the law will cause problems for accountants, possibly for several years to come.

Taxation, Excise taxes, Retirement income, Excise tax

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