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FEDERAL INCOME, ESTATE & GIFT TAX PROJECT 1 (PRELIMINARY DRAFT 198C, May 1956)

handle is hein.ali/aliftp0207 and id is 1 raw text is: CORPOAATE DIVISIONS Introduction. ;:s the Committee concluded at its previous meetings, tae treatment of corporate divisions must be correlated with the treatment of corporatc contractions. Assets wnich are not distributablz in kind free of dividend tax should not be di3tributable free of such tax merely because they have first been placed, or happen to be held, in corporate solution. Unler tha draft corporate contraction statute that has been prepared for the Commit- tee's consideration, the vast majority of Jistributions would not qualify for its sp,.cial treatment. The basic question in t ie divisions area, there- fore, is how these nonqualifying distributions should be treated when taey take the corporate Jivision route. The following statutory example is de- signed to bring into focus the basic issues involved in this question and to illustrate te c laracter of the rules required in a statute that faces up to these issues.