Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 17 June 2005
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https://casecent.re/p/42915
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Abstract
The taxpayer purchased land and later transferred it to a family controlled corporation in return for an earn out. When funds were eventually received, the IRS treated them as dividends, whereas the individual and corporate taxpayers contended they were sums paid on the individual taxpayer''s sale of a corporate asset to the corporation. The question is whether the original transfer to the corporation was a contribution to capital (equity) or the creation of a debtor/creditor relationship.
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Abstract
The taxpayer purchased land and later transferred it to a family controlled corporation in return for an earn out. When funds were eventually received, the IRS treated them as dividends, whereas the individual and corporate taxpayers contended they were sums paid on the individual taxpayer''s sale of a corporate asset to the corporation. The question is whether the original transfer to the corporation was a contribution to capital (equity) or the creation of a debtor/creditor relationship.
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