1. A. General Rule. R.S. 47:287.747 provides that the situs of stock canceled or redeemed in the liquidation of a corporation, whether domestic or foreign, shall be in Louisiana in the same ratio that property located in Louisiana, and received by a shareholder, bears to the total property received in the liquidation. Property as used in R.S. 47:287.747 means all the assets of the liquidating corporation without regard to liabilities. For the purpose of determining the situs of the stock canceled or redeemed in liquidation, the fair market value of the property distributed in liquidation shall be used. The location of the property of the corporation shall be determined in accordance with the provisions of R.S. 47:287.93.

2. B. Example: X, shareholder, owns 10 percent of the shares of ABC, Inc., a foreign corporation. The basis of X's shares is $1,000. On July 1, 1986, ABC Inc., liquidates and exchanges the following property for its outstanding stock, which it cancels.

   1. 1. Since 1/4 of the assets distributed in liquidation are located in Louisiana, 1/4 of X's stock has its situs in Louisiana.

   2. 2. Gain is computed as follows.

      Fair market value of property received	$	20,000
      Basis of property received		1,000
      Gain	$	19,000
      Louisiana taxable gain (1/4 of $19,000)	$	4,750

   	Total Assets (Fair Market Value)	Louisiana Assets (Fair Market Value)
   Cash	$	10,000	$	2,000
   Accounts receivable		50,000		8,000
   Buildings		60,000		30,000
   Land		60,000		10,000
   Stocks		20,000		0
   	$	200,000	$	50,000

Authority Note

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:287.747.

Historical Note

HISTORICAL NOTE: Promulgated by the Department of Revenue and Taxation, Income Tax Section, LR 14:109 (February 1988), repromulgated by the Department of Revenue, Policy Services Division, LR 30:486 (March 2004).