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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4678
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: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years 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 2 years ago.
we give up our 50% stock interest in corporation 1.
Expert:  PDtax replied 2 years 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 2 years ago.
i agree with your conclusion. and i will treat it accordingly. thank you very much
Expert:  PDtax replied 2 years 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.
Expert:  PDtax replied 2 years 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