Rules for liquidating a company
For tax years beginning after October 22, 2004, any distribution by a REIT on stock regularly traded on a securities market in the United States is not treated as gain from the sale or exchange of a U. real property interest if the shareholder did not own more than 5% of that stock at any time during the REIT's tax year. Real Property interest means an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the U. Virgin Islands, as well as certain personal property that is associated with the use of real property (such as farming machinery). A qualified investment entity is any real estate investment trust (REIT) or any regulated investment company (RIC).These distributions are included in the shareholder's gross income as a dividend from the REIT, not as long-term capital gain. It also means any interest, other than as a creditor, in any domestic corporation unless it is established that the corporation was at no time a U. real property holding corporation during the shorter of the period during which the interest was held, or the 5-year period ending on the date of disposition. After December 31, 2004, the sale of an interest in a domestically controlled qualified investment entity is not the sale of a U. The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons.The term Transferee means any person, foreign or domestic, that acquires a U. real property interest by purchase, exchange, gift, or any other transfer.The Amount Realized by the transferor is the sum of: In general, a corporation is a U. real property holding corporation if the fair market value of the U. real property interests held by the corporation on any applicable determination date equals or exceeds 50 percent of the sum of the fair market values of its - Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. Such debtors must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.11 U. If the debtor is an individual (or husband and wife), there are additional document filing requirements. In a "small business case" (discussed below) the debtor may not need to file a separate disclosure statement if the court determines that adequate information is contained in the plan.
If a joint petition is filed, only one filing fee and one administrative fee are charged. Generally, the debtor, as "debtor in possession," operates the business and performs many of the functions that a trustee performs in cases under other chapters. References to these legal authorities are included for the convenience of those who would like to read the technical reference material.This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. Normally the sale/purchase of real estate qualifies as a disposition however many other transactions also qualify as dispositions (e.g. Withholding is required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. However, this withholding requirement does not apply if the foreign corporation has elected under IRC section 897(i) to be treated as a domestic corporation. A distribution from a domestic corporation that is a U. real property holding corporation (USRPHC) is generally subject to NRA withholding and withholding under the U. A USRPHC can satisfy both withholding provisions if it withholds under one of the following procedures. You must withhold 35% on any distribution to a foreign beneficiary that is attributable to the balance in the real property interest account on the day of the distribution.
A domestic corporation must withhold a tax equal to 10% of the fair market value of the property distributed to a foreign person if: U. The same procedure must be used for all distributions made during the year. If a domestic partnership that is not publicly traded disposes of a U. real property interest at a gain, the gain is treated as effectively connected income and is subject to the rules explained under Partnership Withholding on Effectively Connected Income, and would not be subject to withholding under the FIRPTA provisions. You enter in the account all gains and losses realized during the taxable year of the trust or estate from dispositions of U. A distribution from a trust or estate to a beneficiary (foreign or domestic) will be treated as attributable first to any balance in the U. real property interest account and then to other amounts.
The term refers to a debtor that keeps possession and control of its assets while undergoing a reorganization under chapter 11, without the appointment of a case trustee. Generally, a written disclosure statement and a plan of reorganization must be filed with the court.