Free Up Funds for Estate Expenses with Section 303 Redemptions

Authors

Robert M. Kozub
James Trebby, Marquette UniversityFollow

Document Type

Article

Publication Date

2-2002

Source Publication

Practical Tax Strategies

Abstract

Generally, proceeds received by shareholders for a corporation's redemption of its own stock are dividends, taxed under the principles established by Section 301. Therefore, whether a corporation distributes cash or property, the distribution is not deductible by the corporation and is ordinary income to the shareholder to the extent of the corporation's earnings and profits. Sections 302(b) and 303 provide 5 important exceptions to the general rule. These exceptions allow the cash or other property received by the shareholder whose stock is being redeemed possibly to qualify as the proceeds from the sale or exchange of property.

Comments

Practical Tax Strategies, Vol. 68, No. 2 (February 2002): 68-78. Publisher URL: http://ria.thomsonreuters.com/estore/detail.aspx?ID=PTS.

Recommended Citation

Kozub, Robert M. and Trebby, James, "Free Up Funds for Estate Expenses with Section 303 Redemptions" (2002). Accounting Faculty Research and Publications. 49.
https://epublications.marquette.edu/account_fac/49