The taxpayer asked the Service whether the anti-dilution clause created an SCOS that would terminate
its S status.
The Service ruled in each case that the temporary conversion did not terminate
the initial S election.
Because old BC's assets had a greater net FMV than old AB's, BC is the continuing/resulting partnership; AB terminates
If an S corporation violates any of these restrictions, its S election automatically terminates
. However, the taxpayer can request an inadvertent termination ruling under Sec.
At the end of the third year, the partnership terminates
These seemingly reasonable rules may not apply to an intercompany sale of a partnership interest if the partnership terminates
because it no longer has more than one partner (i.e., a Sec.
1.1361-5(d), if a QSub election terminates
because of a disposition of the corporation's stock, the corporation, without IRS consent, may make an S or QSub election before the five-year period expires, if certain conditions are met.
In the first situation, one partner buys out his only other partner; the LLC terminates
for partnership tax purposes and the assets are deemed distributed in liquidation.
* A taxpayer that ceases to engage in a trade or business or that terminates
its existence must take the balance of the adjustment related to the trade or business into account in computing income in the tax year of the cessation or termination.
M2 EQUITYBITES-January 4, 2016-China Digital TV terminates
TELECOMWORLDWIRE-January 4, 2016-China Digital TV terminates
For example, if an Employer terminates
on account of a Contractor's breach, it is common for the Employer to not be required to make further payment to the Contractor until the cost of completing the works (and therefore of engaging an alternative contractor) has been determined.