Proportionate liquidating distribution

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PLR 201236003 Over the years, the IRS has interpreted the disproportionate distribution rules fairly liberally.

Last Friday, in PLR 201236003, an S corporation had made disproportionate distributions for what appears to have been several years.

Practitioners often construe this requirement to be more restrictive than it really is, believing that a single disproportionate distribution will be an indication that you have more than one class of stock, and — Voila! Applying these concepts to our fact pattern above, if the S corporation makes a disproportionate distribution to A and B, the IRS would look to Treas. Section 1.1361-1(l)(2)(i) for guidance on whether the disproportionate distribution is indicative of multiple classes of stock.

Those regulations provide that the determination of whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter, articles of incorporation, bylaws, applicable state law, and binding agreements relating to distribution and liquidation proceeds (collectively, the governing provisions).

Pax World Management LLC, is a recognized leader in Sustainable Investing, the full integration of environmental, social and governance (ESG) factors into investment analysis and decision making.

Pax World launched the financial industry’s first socially responsible mutual fund in 1971.

Earlier this year, the IRS issued three private letter rulings benefiting S Corporations.

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“We haven’t been able to achieve satisfactory trading volume or asset growth, so we have decided to close the fund,” said Pax World President and CEO Joe Keefe, of the ETF, which employs a passive management strategy seeking to track the performance of the MSCI North America ESG Index.“We are confident about the continued growth of EAPS and we remain committed to the ETF market despite the closure of NASI.” Pax announced that the last date for authorized participants to create units in NASI will be March 6, 2013 and the last date to redeem shares will be on or before PM EST on March 13, 2013.The last day of trading for NASI on the NYSE Arca (the cessation date) is expected to be March 13, 2013, after which the fund shall cease its business as an investment company and shall not engage in any business activities except for the purpose of winding up its business affairs, preserving the value of its assets, discharging or making reasonable provision for the payment of all the fund’s liabilities and liquidating and distributing its remaining assets to the shareholders of the fund.(the “Fund”) (NYSE MKT: PHF) announced today that it will close its share register books at the close of business on July 10, 2017 (the “Effective Date”) and that trading of the Fund’s stock on the NYSE MKT will be suspended before the market open on July 11, 2017.The proportionate interests of stockholders in the net assets of the Fund will be fixed on the basis of their respective holdings at the close of business on the Effective Date.

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