Alabama Administrative Code
Title 810 - ALABAMA DEPARTMENT OF REVENUE
Chapter 810-3-8 - RECOGNITION OF GAIN OR LOSS
Section 810-3-8-.04 - Exchanges In Pursuance Of A Plan Of Reorganization
Universal Citation: AL Admin Code R 810-3-8-.04
Current through Register Vol. 42, No. 11, August 30, 2024
(1) For transactions after December 31, 1984, federal interpretations pertaining to 26 U.S.C. §§ 354, 355, 356, 361, 371 and 374 will be followed in determining the amount of gain or loss recognized as the result of a reorganization specified in 26 U.S.C. § 368 or a distribution that qualifies under 26 U.S.C. § 355. For interpretation of federal statutes adopted by the Alabama Legislature see Rule 810-3-1.1 -.01, Operating Rules.
(2) For transactions before January 1, 1985 -
(a) For
the purpose of this rule the term "reorganization" means:
1. The merger of one or more corporations in
accordance with statutory authority into another;
2. The consolidation pursuant to statutory
authority of two or more corporations into a new corporation;
3. The acquisition by one corporation of at
least a majority of the voting stock, or substantially all the properties of
another corporation;
4. The
transfer by one corporation of all or a part of its assets to another, if
immediately after the transfer the first corporation or its stockholders, or
both, are in control of the second corporation (control for this purpose being
defined in §
40-18-8(j),
Code of Ala. 1975, as the ownership by the first
corporation or its stockholders, or both, of the second corporation to the
extent of at least fifty-one percent of the voting stock and at least eighty
percent of the total number of shares of all other classes thereof);
5. A recapitalization;
6. A mere change in identity, form or place
of organization, however effected.
(b) No taxable income is received, nor is a
deductible loss sustained, when a corporation exchanges property solely for
stock or securities in another corporation, if
1. the exchange is in pursuance of a plan of
reorganization, and
2. the
corporation receiving the stock is a party to a plan of reorganization,
and
3. the stock received is of a
corporation which is a party to the same plan of reorganization.
(c) If in any transaction, which
would fall within §
40-18-8(b)(4) if the exchange were solely in kind, there is received by the taxpayer other
property (in addition to property permitted to be received by the taxpayer
without recognition of gain) and/or money, then
1. if the corporation receiving such other
property or money distributes it in accordance with the plan of reorganization,
no gain from the exchange will be recognized to the corporation, or
2. if such distribution is not made, the gain
to the corporation shall be recognized in an amount not in excess of the sum of
money and the fair and reasonable market value of such other additional
property received.
(d)
If a shareholder in a corporation, in a reorganization, surrenders none of his
stocks or securities but receives stocks or securities in any corporation which
is a party of the reorganization no gain is recognized.
1. The distribution shall not be considered a
distribution of earnings and profits within the meaning of §
40-18-8(b)(4) for determining the taxability of subsequent distributions by the corporation.
Authors: Verlon R. Frost, Jeff Taylor
Statutory Authority: Code of Ala. 1975, §§ 40-2A-7(a)(5), 40-18-8.
Disclaimer: These regulations may not be the most recent version. Alabama may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
