Hastings Business Law Journal


Neil R. Blecher


This paper discusses various issues related to Section 1032 of the Internal Revenue Code, including the proper scope and applicability of Section 1032 necessary to ensure that economically equivalent transactions are treated in a consistent manner. Among other topics, the paper provides a summary of legislative enactments and judicial and administrative rulings related to Section 1032 and a review of the general scope and applicability of the section in current tax practice. The paper also provides an analysis of attempts to provide for a workable definition of "money or other property in exchange for stock" within the meaning of Section 1032 as well as the impact of the applicable rules on equity derivatives and employee stock option plans. Lastly, the paper reviews and discusses the proper scope of Section 1032 and proposals for amending the provision to reduce the opportunity for whipsaw.