Deemed transfer on entity reconstitution: capital assets or money received are taxed as capital gains or business income. Section 45(4) deems money and fair market value of capital assets received by a partner/member on reconstitution or dissolution to be income of the specified entity chargeable as Capital Gains, computed as A = B + C - D (zero if negative), excluding capital account increases from revaluation or self generated assets; characterization as short term or long term depends on the asset's status. Section 9B deems a transfer by the specified entity when capital assets or stock in trade are received by a specified person, taxes resulting gains as business income or capital gains with FMV as consideration, and mandates attribution rules and electronic filing of Form 5C.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Deemed transfer on entity reconstitution: capital assets or money received are taxed as capital gains or business income.
Section 45(4) deems money and fair market value of capital assets received by a partner/member on reconstitution or dissolution to be income of the specified entity chargeable as Capital Gains, computed as A = B + C - D (zero if negative), excluding capital account increases from revaluation or self generated assets; characterization as short term or long term depends on the asset's status. Section 9B deems a transfer by the specified entity when capital assets or stock in trade are received by a specified person, taxes resulting gains as business income or capital gains with FMV as consideration, and mandates attribution rules and electronic filing of Form 5C.
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