Irene Eisenberg - Page 11

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          1994-539, among other cases, represent the denial of a discount             
          for potential capital gain taxes was based, in part, on the                 
          possibility that the taxes could be avoided by liquidating the              
          corporation.                                                                
               In that regard, petitioner argues that those cases have lost           
          their vitality as a result of the October 22, 1986, enactment of            
          the Tax Reform Act of 1986 (TRA), Pub. L. 99-514, sec. 631, 100             
          Stat. 2269.  Specifically, petitioner contends that the                     
          amendments made by the TRA to sections 336 and 337 repealed the             
          General Utilities doctrine.8  Petitioner states that prior to the           
          effective date of TRA, the corporation could have liquidated                
          completely and distributed the property and cash to her, or to              
          any other individual or entity, without recognizing the built-in            
          gain.  Further, petitioner asserts that, subsequent to the                  
          effective date of TRA, she does not possess the ability to                  
          completely liquidate the corporation without the recognition of             
          the built-in gain.  See e.g., secs. 336(a) and 337.  As a result,           
          petitioner argues that it is now a virtual certainty that if the            

               8The General Utilities doctrine originated in General                  
          Utilities & Operating Co. v. Helvering, 296 U.S. 200 (1935).  The           
          holding of that opinion allowed a corporation to avoid                      
          recognition of gain on the distribution of appreciated property             
          to its shareholders.  In 1954, Congress codified the General                
          Utilities doctrine in sec. 311.  Pursuant to the Tax Reform Act             
          of 1986 (TRA), Pub. L. 99-514, sec. 631(a), (c), 100 Stat. 2085,            
          2269, corporations are now required to recognize gain on the                
          distribution of appreciated property except in certain limited              
          circumstances.  Secs. 311, 336 as amended by TRA sec. 631(a),               
          (c).                                                                        




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