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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4093
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Can 3 stockholders who own 50% of a c corporation transfer

Customer Question

can 3 stockholders who own 50% of a c corporation transfer 50% of that corporations assets to another c corporation owned 100% by the 3 stockholders taxed free?
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Hi from Just Answer. I'mCustomer and can assist. Before I address the tax consequences, I need more information. Is your plan just to take 50% of the assets from corporation 1 and transfer them to corporation 2? If so, what does corporation 1 get in exchange?
Customer: replied 1 year ago.
we give up our 50% stock interest in corporation 1.
Expert:  PDtax replied 1 year ago.
Then you have the effect of a liquidating distribution. I need to research relevant tax law. I have an idea, but need to analyze it before responding. I will need to ask for an additional price for the research time. Accept, and I will look at it right now.
Customer: replied 1 year ago.
i agree with your conclusion. and i will treat it accordingly. thank you very much
Expert:  PDtax replied 1 year ago.
That wasn't my conclusion. I believe this is taxable, similar to a redemption or liquidating distribution.
I wanted to look at ways to structure the transaction to avoid the tax.
If you wish, accept my answer to close out your question. Positive feedback will be appreciated.
Customer
Expert:  PDtax replied 1 year ago.
Since you did not accept my Offer, I assume you accepted my response as satisfactory.
Please provide positive feedback to close out your question. I'mCustomer

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