- 10 -
less assets retained to meet claims, then no gain or
loss shall be recognized to such corporation from the
sale or exchange by it of property within such 12-month
period.
ACT was required to adopt a liquidation plan on or before
the sale date of its assets. Liquidation is a process distinct
from other corporate action.
The liquidation of a corporation is the process of
winding up its affairs by realizing upon its assets,
paying its debts, and appropriating the amount of its
profit and loss. It differs from normal operation for
current profit in that it ordinarily results in the
winding up of the corporation's affairs, and there must
be a manifest intention to liquidate, a continuing
purpose to terminate its affairs and dissolve the
corporation, and its activities must be directed and
confined thereto. A mere declaration is not enough,
and the question whether a corporation is in
liquidation is one of fact. * * * [T.T. Word Supply
Co. v. Commissioner, 41 B.T.A. 965, 980-981 (1940).]
The intent to liquidate must be adopted in a plan. A plan is a
method of putting into effect an intention or proposal. Burnside
Veneer Co. v. Commissioner, 167 F.2d 214, 217 (1948), affg. 8
T.C. 442 (1947). The statute does not require a formal plan.
Mountain Water Co. v. Commissioner, 35 T.C. 418, 426 (1960).
However, if there is no formal plan, the adoption date of a
liquidation plan is determined from the facts and circumstances.
Id.; sec. 1.337-2(b), Income Tax Regs. The facts and
circumstances must provide clear evidence of an intention to
liquidate if an informal plan is to be established. Blaschka v.
United States, 184 Ct. Cl. 264, 393 F.2d 983, 988 (1968).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011