Liquidating trust and taxable event

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(ii) Total corporate liabilities means current liabilities, funded debt and accrued liabilities.

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A reserve for deferred Federal taxes may not be included as contingent liability.

Generally, contingent liabilities and surplus reserves may not be considered corporate liabilities.

However, if the subsidiary or affiliate corporation is not subject to Capital Stock or Foreign Franchise taxation, the corporation is valued at stockholder’s equity. The revised stockholder equity is computed as follows: The revised stockholder equity is $1,148,767. In using an arithmetical method, further adjustments may be needed to take into consideration other influencing factors, in addition to those factors set forth in § 155.23 (relating to determination of valuation factors), such as the nature of the business of the taxpayer (industrial, manufacturing, investment, personal service, utility and so forth), the financial history of the taxpayer, the liquidity of the taxpayer’s balance sheet assets, extraordinary and nonrecurring transactions and other pertinent factors.

(iv) Stock of subsidiary and affiliate corporations are valued on the basis of the capital stock reported by the subsidiary or affiliate corporation for Capital Stock or Foreign Franchise Tax purposes. The stockholder equity at the end of the tax year (December 31) is $1,000,000. The revised stockholder equity is computed as follows: This section cited in 61 Pa. Code § 155.28 (relating to capital stock value methods—fixed formula). In general valuation will be made in accordance with the following: (1) The Department recognizes that no arithmetical method is of itself adequate and complete in all instances in determining the capital stock value.

(ii) If, for those taxpayers whose operations have produced high earnings in the current tax year or in the preceding tax years the stockholder equity generally does not adequately reflect the capital stock value.

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