The proposals list an ordering rule for the adjustment, either increases or decreases, of stock basis.
They also include provisions on the timing of basis adjustments, basis computations during a loss year, computation of individual stock basis and the categorization of debt as basis.
The shareholder's oil and gas depletion deduction; c. Non- separately computed losses that pass through; and e. Reducing stock basis for non-deductible items prevents a shareholder from converting a non-deductible expense at the corporate level into a deductible expense when stock is sold or a liquidating distribution is received.
Although our Board of Directors has not adopted a timetable for further liquidating distributions, subject to contingencies inherent in winding up our business, the Board of Directors intends to make such distributions as promptly as practicable, subject to the requirements of Delaware law.
Owners of beneficial interests in our common stock who are not also record holders of our common stock (for example, those who hold ownership interests in our shares in book-entry form through DTC and other persons with ownership interests held in "street name" by a broker, bank or other nominee) are not entitled to liquidating distributions directly from the Company.
In essence, the ordering rule allows shareholders to "borrow" basis from anticipated net income at the end of the year while receiving distributions during the taxable year.
Since adjustments to basis are made at the end of the year, the shareholder's basis at the time of the distribution is irrelevant. These rules limiting losses and allowing tax-free distributions up to the amount of the shareholder's adjusted basis are similar in certain respects to the rules governing the treatment of losses and cash distributions by partnerships.
Capital contributions by shareholders to the corporation; b.
Separately stated income items (whether taxable or not); c. Excess of depletion deductions over basis of property subject to depletion. Non-deductible expenses that are not properly chargeable to a capital account also reduce stock basis; b.The consequences of distributions to the shareholders and the corporation are discussed further.Shareholders in an S corporation must keep careful track of their tax basis.During 1992, she received salary payments from Giant of ,000 (including her portion of the health insurance premiums) and ,000 of cash distributions.Results of operations for 1992 for tax purposes are presented in Table 1.With respect to additional liquidating distributions, Delaware law requires that we pay or make provision to pay all of our liabilities and obligations, including contingent and conditional liabilities, claims that are subject to pending litigation involving the Company and certain claims that have not arisen or are unknown but that are likely to arise or become known in the future.