Question

What is the essence of Rev. Ruling 85-106?

Answer 1

The essence of the Rev. Ruling 85-106 is that under a prescribed circumstances, the court pays due attention towards the effect of redemption of some rights of the shareholders, namely :

1. The right to vote and thus exercising the control to some extent
2. In case the company goes into liquidation, the right to have some part
3. The right to receive dividends

So, on certain facts and circumstances of cases, the ruling 85-106 applies to the shareholders rights to exercise some control over the company.

================