Payments under stock agreement were sales proceeds
Article Abstract:
The Tax Court concluded in 'Ruf,' TCM 1993-81 that the distributions from a corporation that were in accordance with a stock purchase agreement were sales proceeds. The Court disallowed the taxpayer from recharacterizing the distributions as a loan, as well as the IRS from considering them as a constructive dividend. The taxpayer's attempts to treat the proceeds were rejected partly because the transaction lacked several significant features of a 'true debt,' including any document proving the existence of a loan, a fixed repayment schedule and a mechanism for interest payments. The Service's petition to recharacterize the proceeds as a constructive dividend was likewisedenied because the agency failed to present evidence supporting this claim. Specifically, the IRS failed to convince the court that the stock was bought above its fair market value.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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Executive stock options and constructive sales
Article Abstract:
Executive stock options and some hedging transactions are heavily impacted by the Taxpayer Relief Act of 1997. Executive stock options are likely to become a more popular means of executive compensation with the reduction in the long-term capital gains rate to 20%. Analysis of whether, when, and how to exercise options is still necessary but brings different results. New IRC section 1259 has a negative impact on hedging transactions but some alternatives may still be available.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1998
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