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assumption of the corporation's liabilities to its lenders and
his recovery of his investment out of the balance. With that
final distribution, WSAI held title to no further assets of any
substantial consequence. With the exception of interest payments
made through the beginning of 1989,11 WSAI engaged in no further
activities.
Finally, respondent argues that petitioners made no
disclosure of any kind on their 1988 individual income tax return
regarding the receipt of the two condominium units as a
liquidating distribution, as required by section 1.331-1(d),
Income Tax Regs, which states:
In every case in which a shareholder transfers
stock in exchange for property to the corporation which
issued such stock, the facts and circumstances shall be
reported on his return unless the property is part of a
distribution made pursuant to a corporate resolution
reciting that the distribution is made in liquidation
of the corporation and the corporation is completely
liquidated and dissolved within one year after the
distribution. See section 6043 for requirements
relating to returns by corporations.
Section 1.331-1(d), Income Tax Regs., does not impair
our ultimate conclusion that a de facto liquidation did occur
during the taxable year 1988 in the case at hand. Although
section 1.331-1(d), Income Tax Regs., appears to complement
section 6043 and section 1.6043-1, Income Tax Regs., thereunder,
11The record contains no evidence of the source of the funds
that were apparently used to make interest payments in the name
of WSAI.
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