"Exchange of net value" requirement.

• Author: Laffie, Lesli S.
• Position: REGULATIONS

Proposed regulations (REG-163314-03, 3/9/05) provide guidance on corporate formations, reorganizations and liquidations of insolvent corporations. These rules require the exchange (or, in the case of Sec. 332, a distribution) of net value for the subchapter C nonrecognition rules to apply to the transaction.

The regulations also provide guidance on determining when and the extent to which creditors of a corporation be treated as its proprietors in...