§ 77-2715.08 — Capital gains; terms, defined

Nebraska § 77-2715.08

• Jurisdiction: Nebraska
• Ch. 77: Revenue and Taxation

Text

For purposes of this section and section 77-2715.09 , unless the context
otherwise requires:
(1) Capital stock means common or preferred stock, either voting or
nonvoting. Capital stock does not include stock rights, stock warrants, stock
options, or debt securities;
(2)(a) Corporation means any corporation which, at the time of the first
sale or exchange for which the election is made, has been in existence and
actively doing business in this state for at least three years.
(b) Corporation also includes:
(i) Any corporation which is a member of a unitary group of corporations,
as defined in section 77-2734.04 , which includes a corporation defined in
subdivision (2)(a) of this section; and
(ii) Any predecessor or successor corporation of a corporation defined
in subdivision (2)(a) of this section.
(c) All corporations issuing capital stock for which an election under
section 77-2715.09 is made shall, at the time of the first sale or exchange
for which the election is made, have (i) at least five shareholders and (ii)
at least two shareholders or groups of shareholders who are not related to
each other and each of which owns at least ten percent of the capital stock.
(d) For purposes
of subdivision (2)(c) of this section:
(i) Each participant
in an employee stock ownership trust qualified under section 401(a) of the
Internal Revenue Code of 1986, as amended, is a shareholder; and
(ii) Two persons shall be
considered to be related when, under section 318 of the Internal Revenue Code
of 1986, as amended, one
is a person who owns, directly or indirectly, capital stock that if directly
owned would be attributed to the other person or is the brother, sister, aunt,
uncle, cousin, niece, or nephew of the other person who owns capital stock
either directly or indirectly;
(3) Extraordinary dividend means any dividend exceeding twenty percent
of the fair market value of the stock on which it is paid as of the date the
dividend is declared; and
(4) Predecessor or successor corporation means a corporation that was
a party to a reorganization that was entirely or substantially tax free and
that occurred during or after the employment of the individual making an election
under section 77-2715.09 .

Legislative History

Source: Laws 1987, LB 775, § 11; Laws 1991, LB 773, § 11; Laws 2007, LB343, § 4; Laws 2013, LB573, § 1. Annotations: This section does not include any "economic activity" or "business purpose" requirements for creating a qualified corporation and merely sets forth certain requirements for the shareholders at one specific point in time for the special capital gains election. Stewart v. Nebraska Dept. of Rev., 294 Neb. 1010, 885 N.W.2d 723 (2016).