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Section 243 And Bootstrap Sales: The Dilemma Of The Corporate Shareholder, Don B. Cannada

Vanderbilt Law Review

The differences in the tax treatment of dividends and redemptions, the tax goals of individual and corporate shareholders, and the characterizations given corporate distributions by the Internal Revenue Service and the courts have combined to create over-whelming confusion for corporate bootstrap sales. The purpose of this Note is to formulate a rational, consistent approach to the tax treatment of corporate bootstrap sales. Accordingly, this Note initially will discuss various lines of cases governing the possible tax treatment of the seller in a bootstrap acquisition. Special emphasis will be placed on the recent line of cases that deny section 243 intercorporate …