Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
395.0000 OCCASIONAL SALES—SALE OF A BUSINESS—BUSINESS REORGANIZATION—Regulation 1595
(k) DISSOLUTION; LIQUIDATION; DISTRIBUTION OF ASSETS
395.2335 Partial Dissolution of Corporation and Consequent Distribution of Assets. Partnership A originally obtained a ground lease and constructed a hospital. Partnership A formed Corporation B, which it wholly owned, to operate the hospital. Partnership A leased the hospital to B which operated it. On December 5, 1963, Corporation B was partially dissolved and the assets were distributed to the shareholder, Partnership A. On December 31, 1963, substantially all of the property was transferred by A to C. There is no evidence of any contracts of sale or any negotiations before the transfer. B continued to operate the hospital from December 5 to December 31, but had no property rights after the partial dissolution.
The distribution of the assets by B was a tax-free distribution of assets to its shareholder. The subsequent sale by A of assets used in its service enterprise and not in an activity for which it was required to hold a seller's permit is an exempt occasional sale. 7/25/66.