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FEDERAL INCOME, ESTATE & GIFT TAX PROJECT 1 (POLICY QUESTIONS RELATING TO SUBCHAPTER C OF THE INTERNAL REVENUE CODE OF 1954)

handle is hein.ali/aliftp0198 and id is 1 raw text is: OC X--
POLICY QUESTIONS RELATING TO SUBCHAPTER C OF THE
INTERNAL REVENUE CODE OF 1954
,A. COAPORATE DISTRIBUTIONS IN GENERAL
To date the basic preliminary assumptions have been:-
i) rhe tax status of corporate distributions is determined by reference
to the corporation's earnings and profits.
ii) No gain or loss is recognized to a corporation on a distribution
of appreciated or depreciated property.
1. Should there be a change in these assumptions?
2. If not, with respect to a distribution in kind:-
a) should earnings and profits be adjusted to reflect the
appreciation or depreciation of the distributed property?
b) If earnings and profits are not to be adjusted, how should
dividend treatment of a distribution in kind be determined?
3. Should the Internal Revenue Code be amended to change the decision in
George M. Gross, 23 T. C. No. 97, which permitted a corporation to mort-
gage appreciated property and distribute the proceeds tax free.
B. STOCK DIVIDENDS - STOCK RIGHTS
4. Is the policy of §306 to be retained?
5. If so,
a) Should  306 be modified to allow the distributee of 3306 stock
to elect to be taxed at the time of distribution? (Does this raise
.a valuation problem?)
b) Should the exemption from j306 of preferred stock issued at a
time when the corporation had no earnings and profits be
continued [§306(c)(2)]?

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