Estate Stock Redemptions--Proactive Steps to Achieve Sales Treatment
By Dennis R. Lassila, Cheryl Arflin and Roy Clemons
March 2012
Practical Tax Strategies, Vol. 88, #3, pp. 106-112
Abstract
A tax planning strategy that can significantly reduce estate taxes is to structure the redemption of an estate’s corporate stock to qualify for sales treatment as opposed to dividend treatment. Due to the attribution rules found in I.R.C. §318 it is often necessary for an estate to sever its ties with its beneficiaries prior to the estate’s stock redemption if sales treatment is desired. In this paper important conditions required for an estate to obtain sales treatment for its stock redemption are analyzed, and proactive steps are presented that an estate planner can take to help assure that sales treatment is achieved for the estate’s stock redemption.
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