Overview
The Biden administration's fiscal 2023 budget plan would introduce a value element into the test for corporate control under section 368(c), a change proposed by the Clinton and Obama administrations. However, the new proposal discussed in Treasury's green book explanation of President Biden's budget omits language from those prior ones that would have excluded the value of specific preferred stock from the calculation of a corporation’s overall stock value.
In an article by Tax Notes titled, "Biden Budget Adds Twist to Corporate 'Control' Definition," Steptoe partner Eric Solomon was quoted on the possible interpretations of the absence of the section 1504(a)(4) exclusion from the Biden administration proposal.
"It is possible Treasury intends to include pure preferred stock in the control calculation," said Solomon. "But it's also possible that Treasury considers an explicit exclusion to be unnecessary under its interpretation of section 1504 or wants to leave that question open for a later decision in the legislative process."
The full article can be read on Tax Notes (subscription required).