Big Hong Ng - Page 28

          Street property to her.  Ms. Ng contends that because Strong Hope           
          sold its interest in the Stockton Street property to her, after the         
          sale, it had an asset, namely, the $110,000 that IES paid to the            
          IRS on Strong Hope's behalf and which Strong Hope claims should be          
          refunded to it.                                                             
               We previously determined that Ms. Ng did not acquire an                
          interest in the Stockton Street property from Strong Hope in a              
          section 1031 exchange transaction.  In our opinion, the correct             
          characterization of the transfer of Strong Hope's interest in the           
          Stockton Street property to Ms. Ng is a distribution of property,           
          not a sale.                                                                 
               A liquidating distribution of property by a corporation to a           
          shareholder is taxable to the shareholder as gain from the sale or          
          exchange of property to the extent the distribution exceeds the             
          shareholder's basis in his stock.  Any distribution that is part of         
          a series of distributions under a plan to redeem all outstanding            
          stock is treated as a liquidating distribution.  Sec. 346(a).               
          Liquidating distributions are treated as full payment for a                 
          shareholder's  stock.    Sec.  331(a).    To  find  a  corporate            
          liquidation, there must be a manifest intention to liquidate and a          
          continuing purpose to terminate corporate affairs, and the                  
          corporation's activities must be directed to such termination.              
          Estate of Maguire v. Commissioner, 50 T.C. 130, 142 (1968).                 
               The parties stipulated that Strong Hope's sole U.S. business           
          activity was the rental of its individual one-half interest in the          

Page:  Previous  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  Next

Last modified: May 25, 2011