Acc 565 Assignment 2 Essay
According to IRC SEC 301 if the IRS is sharing that amount which is on fair market value of assets received therefore, in this scenario the stock is lying 50% by the client and his son the value is determine as the fair market value as per the section 301 of the IRC of the IRS, as the stock is treated as dividend under the rules there the FMV is determined the gross income. (Investorwords, 2014).
Ans3. The amount of 301 Section of IRS of the IRC of the distribution in excess of the e and p allocated thereto is treated as a capital return for shareholders to the limit of its foundation in the shares and the stock whose root is abridged by that sum. (IRS, 2014).
Section 301 states that excess distribution over the shareholder’s stocks is capital gain and can be treated to the same by stock sailing. Sec 301(c) (3) (A). The tax consequence of a shareholder's receiving a section 301 distribution depends upon the "earning and profits" where the distribution was actually made by the distribution corporation. A quick definition: The term “profits and earnings” is a term of art in tax law. In simple words we can describe it as the corporate funds which are distributed to the corporate shareholders without the reduction in their own capital. (BUS, 2014).
Because there is no difference actually in a situation of redemption occurring by pro rata basis to the shareholders and