Friday, January 27, 2023 | Back issues
Courthouse News Service Courthouse News Service

Merrill Lynch Sale to Be Treated as Distribution

(CN) - Merrill Lynch's sale of corporate assets among its subsidiaries must be treated as a distribution in exchange for stock, the U.S. Tax Court ruled.

Merrill Lynch sought to terminate its ownership interest in Merrill Lynch Capital Resources (MLCR), which sold off its stock in other subsidiaries of the parent company.

On its income taxes, Merrill Lynch claimed a capital loss of $466,985, treating the proceeds of the cross-chain stock sales as dividend payments to MLCR.

Judge Marvel ruled instead that the stock sale should be treated as a distribution.

In order to claim a loss, Marvel ruled, "the persons in control must actually receive property in exchange for the transfer of their issuing corporation stock."

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.