(no subject)
Today I have been working on a tax research project that is due next Sunday. The paper will probably be anywhere between 40-65 pages long. Here is what I have so far:
MEMORANDUM
TO: Dr. Reed W. Easton
FROM: Group 3 (Magdalena Vance, Anthoula Stefanou, Tiffany-Anne Scrudato,
Jaclyn Schaffer, Nicole Sisinni)
DATE: November 13, 2005
RE: Determination of taxability of earnings
Facts
A taxpayer owns building with FMV of $2M. The taxpayer is looking to replace his commercial building with a new building, and is currently looking at two options. One property is a single story building on a valuable lot. The other property is a two-building complex that is part retail and part residential. The taxpayer enters into an agreement with a middleman to assist with the exchange. The agreement requires the taxpayer to sell his current building to the middleman. Within 45 days of closing, the taxpayer will identify the building he wishes to purchase; at that point, the identified property will be sold to the middleman. The middleman will have 180 days from the initial closing to transfer title to the taxpayer. The taxpayer transferred his current property to the middleman and received $10M for the property. One week before the 180 day limit, the seller backed out of the arrangement. The taxpayer does not have sufficient time to find a new seller.
Issue
Is a taxpayer required to report a gain on the sale of property to a middleman if the FMV of his property was $2M and he received $10M for the sale which was part of a larger agreement that was cancelled one week before the required 180 day timeline?
Holding
Yes
Discussion
Internal Revenue Code Section 1081(b)(1) provides that no gain shall be recognized to a transferor corporation which is a registered holding company or an associate company of a registered holding company, if such corporation, under order of the SEC, transfers property in exchange for property, and such order is necessary or appropriate to the integration or simplification of the holding company system of which the transferor is a member. Section 1081(e)(1) provides that if an exchange would be within the provisions of subsection (a) were it not for the fact that the property received in exchange consists not only of property to be received, but also of other property or money, then the gain to the recipient shall be recognized, but in an amount in excess of the sum of such money and the fair market value of such other property.
Internal Revenue Code Section 1082...
I am SO screwed...
MEMORANDUM
TO: Dr. Reed W. Easton
FROM: Group 3 (Magdalena Vance, Anthoula Stefanou, Tiffany-Anne Scrudato,
Jaclyn Schaffer, Nicole Sisinni)
DATE: November 13, 2005
RE: Determination of taxability of earnings
Facts
A taxpayer owns building with FMV of $2M. The taxpayer is looking to replace his commercial building with a new building, and is currently looking at two options. One property is a single story building on a valuable lot. The other property is a two-building complex that is part retail and part residential. The taxpayer enters into an agreement with a middleman to assist with the exchange. The agreement requires the taxpayer to sell his current building to the middleman. Within 45 days of closing, the taxpayer will identify the building he wishes to purchase; at that point, the identified property will be sold to the middleman. The middleman will have 180 days from the initial closing to transfer title to the taxpayer. The taxpayer transferred his current property to the middleman and received $10M for the property. One week before the 180 day limit, the seller backed out of the arrangement. The taxpayer does not have sufficient time to find a new seller.
Issue
Is a taxpayer required to report a gain on the sale of property to a middleman if the FMV of his property was $2M and he received $10M for the sale which was part of a larger agreement that was cancelled one week before the required 180 day timeline?
Holding
Yes
Discussion
Internal Revenue Code Section 1081(b)(1) provides that no gain shall be recognized to a transferor corporation which is a registered holding company or an associate company of a registered holding company, if such corporation, under order of the SEC, transfers property in exchange for property, and such order is necessary or appropriate to the integration or simplification of the holding company system of which the transferor is a member. Section 1081(e)(1) provides that if an exchange would be within the provisions of subsection (a) were it not for the fact that the property received in exchange consists not only of property to be received, but also of other property or money, then the gain to the recipient shall be recognized, but in an amount in excess of the sum of such money and the fair market value of such other property.
Internal Revenue Code Section 1082...
I am SO screwed...