Law Commons^™

Bootstraps And Capital Gain--A Participant's View Of Commissioner V. Clay Brown, William H. Kinsey

Michigan Law Review

A closely held corporation may be sold in a variety of ways. At one end of the spectrum is an all-cash sale. In such a transaction, the seller receives the purchase price and has no further concern with the economic well-being of the business. The difficulty with this method, of course, is finding a purchaser with sufficient cash who is willing to pay a fair price.

At the other end of the spectrum is a full-fledged bootstrap sale, where there is no down payment other than from the underlying assets of the sold corporation, and the purchaser's obligation to pay …

Corporations- Allocation Of Subsidiary's Tax Benefit From Consolidated Return, Thomas B. Ridgley

Michigan Law Review

Defendant parent corporation received from its subsidiary 3,556,992 dollars in tax benefits which had accrued to the subsidiary from filing a consolidated income tax return. By agreement between parent and subsidiary, the profit-making corporation was to pay the losing corporation the savings created by the consolidated return. The working relationship of the two assured the subsidiary profits and the parent losses. Consequently, nearly all tax benefit inevitably flowed to the parent. Plaintiffs, the subsidiary's minority stockholders, sought a refunding of benefits allocated to defendant, claiming that the agreement was unfair and alleging that the defendant, as the subsidiary's majority shareholder, …

Taxation - Income Tax - Insurance - Amounts Received By Stockholders Under Life Insurance Contract, C. V. Beck Jr.

Michigan Law Review

A corporation took out several policies of insurance on the life of its president, naming itself as beneficiary. Later, reserving the right to hypothecate the policies, it assigned them to a trustee who agreed to distribute the proceeds of the policies to the stockholders of record at the time of the president's death. At the death of the president the proceeds were paid by the insurance companies to the trustee who then paid them pro rata to the stockholders. At this time the corporation had on hand earnings equivalent to the amount of distribution, and there was no showing that …