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the stock." Prior to the Tax Reform Act of 1986, section 337
provided that "If, within the 12-month period beginning on the
date on which a corporation adopts a plan of complete
liquidation, all of the assets of the corporation are distributed
in complete liquidation, 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." Sec. 337(a). This nonrecognition provision was
repealed by the Tax Reform Act of 1986, Pub. L. 99-514, sec.
631(a), 100 Stat. 2085, 2269. However, a transitional rule
permitted certain small corporations to be eligible for section
337 nonrecognition if they distributed their assets in complete
liquidation before January 1, 1989. Both FSRC and DHF satisfied
the eligibility requirements for this transitional provision.
See Id., sec. 633(d)(1), 100 Stat. at 2278.
The terms "liquidation" or "complete liquidation" are not
defined in section 331 or in the regulations thereunder.
However, related section 1.332-2(c), Income Tax Regs., offers the
following standard:
A status of liquidation exists when the corporation
ceases to be a going concern and its activities are
merely for the purpose of winding up its affairs,
paying its debts, and distributing any remaining
balance to its shareholders. * * *
See also Wood v. Commissioner, 27 B.T.A. 162, 166-167 (1932)
(applying a similar definition). Whether a corporation has
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