Small business tax solutions. (the effect of stock redemption on an S corporation's accumulated adjustment account)

The effect of stock redemption by an S corporation on its accumulated adjustments account (AAA) will depend on whether the redemption is characterized as an exchange or as a distribution. Under IRC section 1368, distributions are considered to have come from the AAA first. To be considered an exchan...

Full description

Saved in:
Bibliographic Details
Published in:Journal of accountancy 1995-07, Vol.180 (1), p.40
Main Author: Jamison, Robert W
Format: Magazinearticle
Language:English
Subjects:
Accounting and auditing
Dividends
S corporations
Stock redemption
Taxation
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The effect of stock redemption by an S corporation on its accumulated adjustments account (AAA) will depend on whether the redemption is characterized as an exchange or as a distribution. Under IRC section 1368, distributions are considered to have come from the AAA first. To be considered an exchange, the transaction must be a substantially disproportionate redemption, a distribution in partial liquidation, a termination of the shareholder's entire interest and must not be the essential equivalent of a dividend.
ISSN:0021-8448
1945-0729