Common use of Liquida- tions and reorganizations Clause in Contracts

Liquida- tions and reorganizations. If a corpora- tion acquires the assets of an S cor- poration in a transaction to which sec- tion 381(a) applies, any loss or deduc- tion disallowed under paragraph (a) of this section with respect to a share- holder of the distributor or transferor S corporation is available to that shareholder as a shareholder of the ac- xxxxxxx corporation. Thus, where the acquiring corporation is an S corpora- tion, a loss or deduction of a share- holder of the distributor or transferor S corporation disallowed prior to or during the taxable year of the trans- action is treated as incurred by the ac- xxxxxxx S corporation with respect to that shareholder if the shareholder is a shareholder of the acquiring S corpora- tion after the transaction. Where the acquiring corporation is a C corpora- tion, a post-termination transition pe- riod arises the day after the last day that an S corporation was in existence and the rules provided in paragraph (b) of this section apply with respect to any shareholder of the acquired S cor- poration that is also a shareholder of the acquiring C corporation after the transaction. See the special rules under section 1377 for the availability of the post-termination transition period if the acquiring corporation is a C cor- poration.