taxryland; Minnesota; New Jersey; New York; Tennessee; Virginia; Wisconsin state taxation, conformity with IRC;stock purchases as asset purchases, gain or loss, elections;reorganizations, controlled firm stock Transfer pricing and apportionment issues;For coverage of the conference at which this report was firstpresented, see State Tax Notes, May 31, 1999, p. 1804; 1999 STT 99-13and 1999 STT 100-19; or Doc 1999-18396 (6 original pages) and DocFor the full text of the Tennessee Supreme Court’s ruling inHutton v. Johnson, see Doc 97-31594 (7 pages) or 97 STN 225-32.
TASHA: PUT BOX TEXT HERE, IN BRACKETS. THEN BEGIN FULL TEXT. York. Daniel Thompson is a partner with PricewaterhouseCoopers LLP, San Francisco.
This paper was prepared for the Georgetown University Law Center’s Continuing Education Advanced State and Local Tax Institute, held May 20-21 in Washington. (For a report on the conference, see State Tax Notes, May 31, 1999, p. 1804; 1999 STT 99-13 and 1999 STT 100-19; or Doc 1999-18396 (6 original pages) and Doc 1999-18487 (5 original pages). )A. Internal Revenue Code section 351 provides that no gain or lossis recognized for federal income tax purposes if property istransferred to a corporation by one or more persons solely inexchange for stock in such corporation and immediately after theexchange such persons are in control (at least 80 percent of thevoting stock and of the total number of all other classes ofB. The nonrecognition provisions of IRC section 351 applyregardless of whether the corporation is newly created or is anC.
States generally adopt, either explicitly or implicitly, thenonrecognition provisions of IRC section 351 for incomeD. Although gain or loss may not be recognized for federal andstate income tax purposes, the transfer of property may besubject to sales or use tax if the transfer is not properlystructured. In many states, an exemption from sales and use taxonly applies to transfers to a newly formed corporation. If thetransfer occurs at a later time, tax will be due unless anotherexemption (such as sale for resale) applies. 1. In New York, for example, only the transfer to a corporation “upon its organization in consideration for the issuance of its stock” is excluded from tax.
N. Y. Tax Law section 1101(b)(4)(iv)(D). (a) New York’s regulations provide that transfers made to a dormant corporation which is being activated do not qualify for the exclusion. 20 N.
Y. C. R. R. sectionBibliography:
