- 19 - the sole shareholder of the corporation both before and after the redemption” could not meet the section 302(b)(1) test. Since section 318(a) deems Mr. Combrink the sole stockholder of LINKS, the issuing corporation, both prior to and following the transfer, he likewise is entitled to no relief under paragraph (1). Second, the attribution rules similarly prevent the subject transaction for qualifying for sale treatment under section 302(b)(2). As a result of constructive ownership, the transfer failed to effect the requisite change in Mr. Combrink’s voting control which would signal a substantially disproportionate redemption. Third, an identical rationale, namely, no reduction in deemed ownership, precludes the redemption from constituting a complete termination of Mr. Combrink’s interest under section 302(b)(3). Lastly, with respect to section 302(b)(4), the facts contain no indication that LINKS or COST was involved in a plan of partial termination. We therefore conclude that the December 1996 transaction is governed by section 302(d) and, accordingly, that the tax effects thereof must be determined under section 301.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011