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Full-Text Articles in Law

The Business Purpose Test In Section 355 Distributions: Major Pitfalls For Close Corporation Planning, Brenda D. Crocker Jan 1981

The Business Purpose Test In Section 355 Distributions: Major Pitfalls For Close Corporation Planning, Brenda D. Crocker

University of Richmond Law Review

Since 1918, Congress has recognized the economic necessity of stimulating growth in the business sector by encouraging productive corporate divisions. The unhappy task of more than sixty years has been to draft a statute which maximizes flexibility while precluding tax avoidance abuses. Charting its way by piecemeal legislation, Congress appears to have intended tax-free treatment for stock distributions pursuant to corporate divisions motivated by reasonable business needs. Curiously, although Congress clearly has assumed that a valid business purpose must be the primary motivation for such transactions, it never has expressly addressed the matter by statute. Instead, it has devised numerous …


Capital Expenditures: A Result In Search Of A Rationale, John W. Lee, Nina R. Murphy Jan 1981

Capital Expenditures: A Result In Search Of A Rationale, John W. Lee, Nina R. Murphy

University of Richmond Law Review

A business may reduce its gross income by its expenses to arrive at taxable income; however, not all money paid out by a business during its tax year is deductible in that year. The distinction between business expenses which are deductible under section 1622 and capital expenditures which are not currently deductible under section 2633 is probably the most difficult one to discern in the entire area of business deductions, principally because so many disparate elements are encompassed within the capital expenditure doctrine.