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BTLG Table of Contents > Sales and Use Tax Annotations > O > 395.0000 Occasional Sales > Annotation 395.2200

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O

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395.0000 Occasional Sales—Sale of a Business—Business Reorganization—Regulation 1595

Annotation 395.2200

(k) Dissolution; Liquidation; Distribution of Assets

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395.2200 Distribution of Capital Investment. "A" and "B" form Corporation "C," each contributing an equal amount of capital and receiving equal shares in the corporation. During the course of operations "A" loaned a substantial amount to the corporation. When dissolution of the corporation was effected, "A" received practically all of the tangible personal property of the corporation and treated the transaction as in satisfaction of the corporation's debt to him, charging off as a "bad debt" the difference between his loan to the corporation and the book value of the assets transferred. No assets were distributed to "B."

This is not an exempt distribution of a capital investment. The tax applies to the transaction, the sales price being the book value at which held by the corporation. 9/16/53.