This article discusses collapsible corporations under §341, and explains how it was originally intended to be a narrowly applied, temporary tool for tax avoidance, but thanks to a broad statute may now be used in many other circumstances. Section I gives a brief overview of the historical applications of the collapsible corporation. Section II explains when §341 applies and parses the statute language. Section III establishes the overall framework for a collapsible corporation, starting with a definition for “collapsible corporation” comprised of three elements. Section IV discusses the rebuttable presumption of collapsibility established by §341(c). Section V then lays out the three conditions of §341(d) which allows escape from the punitive rules of §341, and Section VI explains how §341(e) works to soften the otherwise rigid provision. Finally, Section VII then describes a third form of relief, the consent procedure, as provided by §341(f).
Boris I. Bittker,
Collapsible Corporations under the Tax Reform Act of 1986,
35 Clev. St. L. Rev.
available at http://engagedscholarship.csuohio.edu/clevstlrev/vol35/iss1/4