Ezel / IRS Rulings / 201211020

CCA 201211020: Counsel explains how shareholders measure gain or loss in a corporate liquidation

Number
201211020
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Gain or Loss to Shareholders in Corporate Liquidations
Topics
Corporate transactions and reorganizations
Code sections
§ 331
Ruling dated
September 30, 2011
Publicly released
March 16, 2012
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel addresses the tax consequences of a corporation's complete liquidation. Under IRC § 331, amounts received by a shareholder in a complete liquidation are treated as full payment in exchange for the shareholder's stock. The advice states that the shareholder's gain or loss is measured by comparing the amount received in liquidation with the shareholder's basis in the corporation's stock. The document is useful for understanding the basic rule applied to a shareholder's liquidation proceeds.

Ruling snapshot

  • Question: How are a shareholder's tax consequences measured when a corporation completely liquidates?
  • Outcome: Advice given.
  • Key authorities: IRC § 331

Full text (IRS public release)

ID: CCA-930233-11 Number: 201211020
Release Date: 3/16/2012
Office: ---------------------
UILC: 331.00-00

From: ------------------------
Sent: Friday September 30, 2011 2:33 PM
To: --------------------
Cc: -------------------------------------------------------------------------- Subject: RE: Notice of Deficiency

-------pursuant to your request, this memo is written to confirm our conversation of September 28, 2011, regarding the tax consequences of the complete liquidation of a corporation. IRC section 331 provides that amounts received by a shareholder in a complete liquidation of a corporation shall be treated as in full payment in exchange for the stock owned by the shareholder. The gain or loss recognized by the shareholders upon the liquidation of the corporations will be measured by the amount received by the shareholders form the corporations upon the liquidation of the corporations. Gain upon the liquidation will be measured by the amount received by the shareholders in excess of their basis in the corporations. This is determined based upon the amounts received by the shareholders in liquidation of the corporations. If you have any further questions regarding this matter please call. --------

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