Flint Industries, Inc. and Subsidiaries - Page 44




                                       - 44 -                                         
               Section 165(g)28 authorizes a domestic corporation owning              


               28Sec. 165(g) provides in pertinent part:                              
                    SEC. 165(g).  Worthless Securities.--                             
                    (1) General rule.–-If any security which is a                     
               capital asset becomes worthless during the taxable                     
               year, the loss resulting therefrom shall, for purposes                 
               of this subtitle, be treated as a loss from the sale or                
               exchange, on the last day of the taxable year, of a                    
               capital asset.                                                         
                    (2) Security defined.--For purposes of this                       
               subsection, the term "security" means--                                
                         (A) a share of stock in a corporation;                       
                         (B) a right to subscribe for, or to                          
                    receive, a share of stock in a corporation;                       
                    or                                                                
                         (C) a bond, debenture, note, or                              
                    certificate, or other evidence of                                 
                    indebtedness, issued by a corporation * * *,                      
                    with interest coupons or in registered form.                      
                    (3) Securities in affiliated corporation.--For                    
               purposes of paragraph (1), any security in a                           
               corporation affiliated with a taxpayer which is a                      
               domestic corporation shall not be treated as a capital                 
               asset.  * * * a corporation shall be treated as                        
               affiliated with the taxpayer only if--                                 
                         (A) stock possessing at least 80 percent                     
                    of the voting power of all classes of its                         
                    stock and at least 80 percent of each class                       
                    of its nonvoting stock is owned directly by                       
                    the taxpayer, and                                                 
                         (B) more than 90 percent of the                              
                    aggregate of its gross receipts for all                           
                    taxable years has been from sources other                         
                    than royalties, rents (except rents derived                       
                    from rental of properties to employees of the                     
                    corporation in the ordinary course of its                         
                    operating business), dividends, interest                          
                                                             (continued...)           




Page:  Previous  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  Next

Last modified: May 25, 2011