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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amendments made by the TRA to sections 336 and 337 repealed the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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