Seagram case and Seagram's actions highlight current developments

Article Abstract:

Seagrams has suffered a Tax Court defeat regarding the continuity of interest doctrine and a tax planning victory in using the attribution rules to receive dividend treatment for a stock sale. In Seagram v. Commissioner, the Tax Court ruled that Seagram's exchange of Conoco stock for DuPont stock was a tax-free exchange, precluding Seagram's ability to recognize losses on the transactions. Seagram has since exchanged the DuPont stock with DuPont for cash and an equal number of warrants. The transaction is not a reduction in interest, because of the warrants, so Seagram can use dividends-received deductions.

Mergers, acquisitions and divestments, Acquisitions and mergers, E.I. du Pont de Nemours and Co., Seagram Company Ltd., DD

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Administrative proposals point to changes for pass-through entities

Article Abstract:

The IRS has released two notices that could have a significant impact in investment tax planning. Notice 95-14 announced that the IRS is considering allowing all US unincorporated associations to elect whether to be taxed as a partnership or a corporation. The move is intended to free IRS resources from entity rulings that have increased with the increased use of limited liability companies. Notice 95-53 indicates that regulations are forthcoming that are intended focus scrutiny on transactions that vest income and tax benefits, such as deductions and tax credits, in separate entities.

Tax planning, Rents (Property), Unincorporated societies

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Proposals would allow checking the box, but tax shorts against the box

Article Abstract:

Check-the-box proposals will provide tax simplification in income taxation of business entities and investments, although Pres Clinton's in the latter area are opposed by some members of the investment community. The proposed tax election regulations allowing business entities to elect to be treated as partnerships for tax purposes have been well-received. Clinton's proposed changes include taxation of spinoff transactions, dividends-received deduction restrictions, extraordinary dividend gain recognition, and recognition of gains on shorts sales against the box.

Public Finance Activities, Partnerships, Corporate Income Taxes, Business enterprises, Tax elections, Short selling

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