La. Admin. Code tit. 61 § I-1189
Current through Register Vol. 50, No. 8, August 20, 2024
Section I-1189 - Situs of Stock Canceled or Redeemed in LiquidationA. 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 |
1. Since 1/4 of the assets distributed in liquidation are located in Louisiana, 1/4 of X's stock has its situs in Louisiana.2. Gain is computed as follows. 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 |
La. Admin. Code tit. 61, § I-1189
Promulgated by the Department of Revenue and Taxation, Income Tax Section, LR 14:109 (February 1988), repromulgated by the Department of Revenue, Policy Services Division, LR 30:486 (March 2004).AUTHORITY NOTE: Promulgated in accordance with R.S. 47:287.747.