- 16 - burden of proof on a required element of the section 304(b)(3)(B) exception. We therefore hold that, to the extent of $161,885.50, the disputed December 1996 transaction is not removed from the purview of section 304(a) by reason of section 304(b)(3)(B). III. The Tax Treatment--Sections 301 and 302 The $12,247.70 exempted from section 304(a) results in no gain or loss under sections 351 and 357, and we need not address it further. However, because we have decided that $161,885.50 of the transaction must be recast as a redemption in accordance with section 304(a), we turn now to the tax consequences of that characterization. Section 302 provides the framework governing tax treatment of redemptions and reads in pertinent part as follows: SEC. 302. DISTRIBUTIONS IN REDEMPTION OF STOCK. (a) General Rule.--If a corporation redeems its stock (within the meaning of section 317(b)), and if paragraph (1), (2), (3), or (4) of subsection (b) applies, such redemption shall be treated as a distribution in part or full payment in exchange for the stock. (b) Redemptions Treated as Exchanges.-- (1) Redemptions not equivalent to dividends.-- Subsection (a) shall apply if the redemption is not essentially equivalent to a dividend. (2) Substantially disproportionate redemption of stock.--Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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