Section 332 Nonrecognition Liquidation of Subsidiaries – Paul Gaulkin CPA

Under Code Section 332, no gain or loss is recognized by a parent corporation on the receipt of property distributed in complete liquidation of a subsidiary. Basically, the subsidiary’s basis for assets carries over to the parent corporation so that any deferred gain or loss at time of liquidation is recognized if the parent subsequently sells the liquidated subsidiary’s former assets. In order to qualify for Nonrecognition under Section 332, three requirements must be met. These requirements are listed below. … Read more