Technically, § 302(b)(4) grants sale treatment only when the redemption distribution is to a noncorporate shareholder and is in partial liquidation of the distributing corporation.A distribution is likely to be considered in partial liquidation if
A)It is essentially equivalent to a dividend.
B)It is due to the termination of one of two or more "qualified" businesses.
C)It follows the death of the major shareholder.
D)None of the above

Question

Quizplus · Accepted Answer

A distribution is likely to be considered in partial liquidation if it is due to the termination of one of two or more "qualified" businesses. This is the only option that is relevant to the requirements of § 302(b)(4).Option A is incorrect because a distribution that is essentially equivalent to a dividend would not meet the requirements of § 302(b)(4).Option C is incorrect because the distribution following the death of a major shareholder would likely be treated as a redemption of the deceased shareholder's shares, rather than a partial liquidation distribution.

Technically, § 302(b)(4) Grants Sale Treatment Only When the Redemption