Louisiana Administrative Code
Title 61 - REVENUE AND TAXATION
Part I - Taxes Collected and Administered by the Secretary of Revenue
Chapter 11 - Corporation Income Tax
Section I-1189 - Situs of Stock Canceled or Redeemed in Liquidation
Current through Register Vol. 50, No. 3, March 20, 2024
A. General Rule. R.S. 47:287.747 provides that the situs of stock canceled or redeemed in the liquidation of a corporation, whether domestic or foreign, shall be in Louisiana in the same ratio that property located in Louisiana, and received by a shareholder, bears to the total property received in the liquidation. Property as used in R.S. 47:287.747 means all the assets of the liquidating corporation without regard to liabilities. For the purpose of determining the situs of the stock canceled or redeemed in liquidation, the fair market value of the property distributed in liquidation shall be used. The location of the property of the corporation shall be determined in accordance with the provisions of R.S. 47:287.93.
B. Example: X, shareholder, owns 10 percent of the shares of ABC, Inc., a foreign corporation. The basis of X's shares is $1,000. On July 1, 1986, ABC Inc., liquidates and exchanges the following property for its outstanding stock, which it cancels.
|
Total Assets (Fair Market Value) |
Louisiana Assets (Fair Market Value) |
|||
|
Cash |
$ |
10,000 |
$ |
2,000 |
|
Accounts receivable |
50,000 |
8,000 |
||
|
Buildings |
60,000 |
30,000 |
||
|
Land |
60,000 |
10,000 |
||
|
Stocks |
20,000 |
0 |
||
|
$ |
200,000 |
$ |
50,000 |
|
|
Fair market value of property received |
$ |
20,000 |
|
Basis of property received |
1,000 |
|
|
Gain |
$ |
19,000 |
|
Louisiana taxable gain (1/4 of $19,000) |
$ |
4,750 |
AUTHORITY NOTE: Promulgated in accordance with R.S. 47:287.747.
