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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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395.0000 Occasional Sales—Sale of a Business—Business Reorganization—Regulation 1595
Annotation 395.1795
(i) Transfers and Contributions to New Corporation or Partnership
395.1795 Assets Not Transferred Simultaneously. The transfer of assets by a bankrupt company to a commencing corporation in exchange for the shares of the commencing corporation will not be regarded as taxable consideration under the following conditions, even though some of the assets will not be transferred simultaneously with the issuance of the stock:
(1) The transfers of the assets are part of a single integrated bankruptcy plan of reorganization in which the commencing shares and other items are being exchanged for all of the transferred assets. (2) The plan has been approved by the bankruptcy court.
(3) The time between transfers will be short, only a few weeks.
If the above conditions are met, the transfers of assets will be regarded as transfers to a commencing corporation partly in exchange for the first issue stock of a commencing corporation. (Regulation 1595(b)(4).) That is, the stock will not be regarded as taxable consideration for the transfer of assets. Tax does apply, however, to any consideration given for the transfer, including assumptions of indebtedness and warrants received by the transferor. 7/15/93.