§ 351(g)(2)(A)

nonqualified preferred stock

UNDECIDED

0 of 4 settled

  1. 1

    § 351(g)(2)(A)

    ANY OF

    The term “nonqualified preferred stock” means preferred stock if—

    “the holder of such stock has the right to require the issuer or a related person to redeem or purchase the stock,” § 351(g)(2)(A)(i) needs Step 2 the right or obligation counts under (A)(i) to (iii) UNDECIDED unless Step 3 the right or obligation is disregarded under (A) UNDECIDED
    “the issuer or a related person is required to redeem or purchase such stock,” § 351(g)(2)(A)(ii) needs Step 2 the right or obligation counts under (A)(i) to (iii) UNDECIDED unless Step 3 the right or obligation is disregarded under (A) UNDECIDED
    “the issuer or a related person has the right to redeem or purchase the stock and, as of the issue date, it is more likely than not that such right will be exercised, or” § 351(g)(2)(A)(iii) needs Step 2 the right or obligation counts under (A)(i) to (iii) UNDECIDED unless Step 3 the right or obligation is disregarded under (A) UNDECIDED

    “More likely than not” implies facts and circumstances. Cited by Reg. § 1.356-7(b)(1)(i), Reg. § 1.356-7(b)(2)(i), Reg. § 1.356-7(c)

    “the dividend rate on such stock varies in whole or in part (directly or indirectly) with reference to interest rates, commodity prices, or other similar indices.” § 351(g)(2)(A)(iv)
    Research 1
  2. 2

    § 351(g)(2)(B)

    the right or obligation counts under (A)(i) to (iii)

    ALL OF
    “may be exercised within the 20-year period beginning on the issue date of such stock”
    “such right or obligation is not subject to a contingency which, as of the issue date, makes remote the likelihood of the redemption or purchase”
    Research 1
  3. 3

    § 351(g)(2)(C)(i)

    the right or obligation is disregarded under (A)

    ANY OF

    A right or obligation shall not be treated as described in clause (i), (ii), or (iii) of subparagraph (A) if—

    “it may be exercised only upon the death, disability, or mental incompetency of the holder, or” § 351(g)(2)(C)(i)(I) unless Step 4 clause (i)(I) does not apply UNDECIDED
    “in the case of a right or obligation to redeem or purchase stock transferred in connection with the performance of services for the issuer or a related person (and which represents reasonable compensation), it may be exercised only upon the holder’s separation from service from the issuer or a related person.” § 351(g)(2)(C)(i)(II)

    “Reasonable” implies facts and circumstances. Cited by Reg. § 1.351-2(e), Reg. § 1.354-1(f), Reg. § 1.355-1(d), Reg. § 1.356-7(c), Reg. § 1.356-7(e)

    Research 1
  4. 4

    § 351(g)(2)(C)(ii)

    clause (i)(I) does not apply

    ANY OF

    Clause (i)(I) shall not apply if the stock relinquished in the exchange, or the stock acquired in the exchange is in—

    “a corporation if any class of stock in such corporation or a related party is readily tradable on an established securities market or otherwise, or” § 351(g)(2)(C)(ii)(I)
    “any other corporation if such exchange is part of a transaction or series of transactions in which such corporation is to become a corporation described in subclause (I).” § 351(g)(2)(C)(ii)(II)