Explain why the antistuffing rules were enacted to limit the deductibility of losses realized by a corporation upon liquidation


The loss limitation ("antistuffing") rules were enacted primarily to address the artificial losses that could otherwise result with respect to properties that were acquired by a corporation in carryover basis transactions (i.e., ยง 351 and contribution to capital transactions). When loss property (i.e., fair market value less than adjusted basis) is transferred to a corporation and a carryover basis applies, there exists the possibility loss could be recognized twice: once upon disposition of the property by the corporation, and again upon disposition of the transferring shareholder's stock. The antistuffing rules are not limited to carryover basis scenarios (e.g., the related-party loss limitation can apply with respect to property that is acquired in a non-carryover basis transaction), but the overriding reason for the enactment of the rules was to limit the opportunities for taxpayers to use carryover basis transactions to create artificial losses. The enactment of the basis step-down rules for loss properties acquired in carryover basis scenarios reduces the impact of the antistuffing rules upon liquidation, particularly with respect to the built-in loss limitation.

Business

You might also like to view...

______ is necessary in order to implement change.

a. Exploration b. Commitment c. Resistance d. Denial

Business

When it comes to labor relations, which of the following would not be likely under a true stakeholder model of corporate governance?

A. Integrative bargaining with union over wages, hours, and working conditions. B. Information-sharing with labor, including information on company financial status. C. Highly formalized grievance resolution procedures. D. Employer neutrality in a union organizing campaign.

Business

If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90

Indicate whether the statement is true or false

Business

Clay issues a check payable to Discount Mart. Ernestina, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Clay's bank, First Friendly Bank, pays the check. Clay can recover from

A. Ernestina, who can recover from First Friendly Bank. B. First Friendly Bank, which cannot recover from Ernestina. C. First Friendly Bank, which can recover from Ernestina. D. no one.

Business