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This article offers pieces of advice on business taxation in the U.S. There are several considerations in an immediate public offering transaction under Section 351. It requires that the transferor have control of the transferee corporation immediately after the transfer. The sale of stock by the shareholders might disqualify the Section 351 transaction. In cases where the U.S. Internal Revenue Service disallowed a deduction for expenses paid to a shareholder or employee of a closely held corporation, a disallowed deduction may result. To avoid this problem, shareholders are required to have an agreement on reimbursement for the amount of the disallowed expense. In consolidated financials, the Lifo method in inventory evaluation is not required as a method of taxation management.

This article reports that stock transactions in subsidiary acquisitions can be treated as asset deals for tax purposes by using the Internal Revenue Code section 338(h)(10) election in the U.S. A seller will agree to this election only if the tax on an asset deal does not differ materially from the tax imposed on a stock sale or if the buyer agrees to increase the purchase price to reflect any difference. Section 338(h)(10) elections are permitted in acquisitions of S corporations even though, by definition, S corporations do not fulfill the statute's requirement that the target be a subsidiary. An S corporation acquisition can be set up as a stock purchase, but it can be treated as an asset purchase followed by a liquidation of the S corporation for tax purposes. It is a very attractive way to acquire an S corporation because of the ease with which a stock purchase is consummated from a non tax point of view.

The article reports that a loss on the sale of stock sold on a stock exchange in December where delivery is made in the regular way in January is deductible in the year in which December falls. A number of cases hold that such losses were deductible in the year in which the sale was made by the broker. The common thread of these cases was that the securities had been sufficiently identified so that the loss was realized in the earlier year. This rule seems to be an exception to the all events test. If a certificate resulting in a loss is delivered, the loss is apparently deductible in the earlier year even though its amount, or even its existence, was then not definitely ascertainable.