Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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

Annotation 395.2280

(k) DISSOLUTION; LIQUIDATION; DISTRIBUTION OF ASSETS

395.2280 Liquidating Dividend and Transfer to New Corporation. An individual buys all of the outstanding stock of a closely held corporation. He dissolves the corporation and receives its assets in exchange for the stock. He then forms a new corporation by transferring the same assets to it, and receives from it only stock. A liquidating dividend does not constitute a sale under section 6006, and therefore the transfer to the individual by the existing corporation does not constitute a sale. The sale by the individual of the assets received from the corporation in exchange for stock constitutes a sale under section 6006. However, receiving stock in exchange for assets with which the corporation is capitalized incurs no sales tax liability because the gross receipts by which the sales tax is measured is zero. Furthermore, unless there is a series of sales by the individual, or he uses the assets in a taxable business enterprise, the sale by him to the corporation would be an occasional sale under section 6006.5, and exempt from taxation under section 6367. 1/3/63.