Final regulations diminish impact of "hot stock" provision, but leave important questions unanswered

Washington National Tax Services

Recently issued final regulations addressing the application of section 355(a)(3)(B) (the "hot stock" provision) in light of the 2007 amendment to the active trade or business rules under section 355(b)(3) diminish significantly the effect of the hot stock provision, as did prior temporary regulations, but leave unanswered several important questions.



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