Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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O

395.0000 OCCASIONAL SALES—SALE OF A BUSINESS—BUSINESS REORGANIZATION—Regulation 1595

Annotation 395.1897

(i) TRANSFERS AND CONTRIBUTIONS TO NEW CORPORATION OR PARTNERSHIP

395.1897 Incorporation of Partnership. A 50/50 partnership of A and B formed a corporation and all assets and liabilities of the partnership were transferred to it. The corporation issued three classes of stock to the partnership: Class A Common Stock representing 50% of the capitalization of the corporation; Class B Common Stock representing 12½; and Preferred Stock representing 37½. The Articles of Incorporation stated that Class B Common Stock holders were entitled to elect only one member of the Board of Directors and that under certain conditions the Class B Common and Preferred Stock could be redeemed at the option of the corporation. Upon dissolution of the partnership, all of the Class A Common was distributed to B. This transaction meets section 6006.5(b) definition of occasional sale in spite of the conditions imposed on the Class B Common and Preferred Stock. All property of the partnership was transferred to the corporation and after the transfer the ultimate ownership was substantially unchanged. 3/5/75.