Category Archives: Corporate Tax

Defective and Reverse Morris Trust Transactions in the Wild

When one corporation (“Parent”) distributes the stock of a subsidiary (“Sub”), normally both Parent and its shareholders are taxed: Parent on the gain (fair value minus basis) in the Sub shares distributed, and the shareholders for receiving a dividend. ┬áBut, if Parent (1) controls (defined technically) Sub before the transaction, (2) distributes a controlling interest in the transaction, (3) has a corporate business purpose for the transaction, Continue reading