One Step Forward, One Step Backward: Recent Changes in the Nonrecognition Treatment of Preferred Stock and Warrants

Tax Management Memorandum, Vol. 9, 1998

7 Pages Posted: 10 Jul 2015

See all articles by Michael Kliegman

Michael Kliegman

Price Waterhouse Coopers (PwC)

Alan Appel

New York Law School

Date Written: April 27, 1998

Abstract

Recent developments in the reorganization area have altered the landscape as to the scope of the nonrecognition provisions with regard to differing equity instruments. The Treasury Department has recently taken a step forward by promulgating regulations which reverse the long standing position of the Internal Revenue Service ("Service") reflected in Regs. 1.354-1(e), that stock warrants are not included in the term "stock or securities" for purposes of 354. Unfortunately, Congress has recently taken a considerably larger step backward by enacting 1014 of the Taxpayer Relief Act of 1997 (P.L. 105-34), which amends 351, 354, 355, 356, and 1036 to treat certain preferred stock as "boot."

Suggested Citation

Kliegman, Michael and Appel, Alan, One Step Forward, One Step Backward: Recent Changes in the Nonrecognition Treatment of Preferred Stock and Warrants (April 27, 1998). Tax Management Memorandum, Vol. 9, 1998, Available at SSRN: https://ssrn.com/abstract=2628346

Michael Kliegman

Price Waterhouse Coopers (PwC) ( email )

Thaltej Cross Road, S.G. Highway
Ahmedabad, Gujarat 380054
India

Alan Appel (Contact Author)

New York Law School ( email )

185 West Broadway
New York, NY 10013
United States

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