Tax consequences of liquidating a corporation
THE IRS SAYS DISTRIBUTIONS of customer-based intangibles to shareholders are taxable.
If you're thinking about taking equity instead of cash as payment for services, consider this.
The first principle is the Principle of Superposition which superposition: Superposition of rock units is a very simple and straightforward method of relative age determination.
Other forms of ownership, such as limited liability partnerships, have replaced the traditional C corporation structure for many small businesses.In other words, in most cases, the liquidation of a corporation commonly engenders two levels of taxation: tax will be imposed at both the corporate and distributee shareholder levels.* The De Facto Company Closure A complete liquidation is not always accompanied by a formal or legal company shutdown.Thus, unless dissolution brings about an automatic transfer of the corporation’s assets to its shareholders, the corporation, even though dissolved, continues its existence.Accordingly, the shareholders recognize gain on the liquidation, measured by the excess of the net value of the property received over the basis of the stock surrendered in the transaction.2 However, in a private letter ruling issued by the IRS late last year, both the corporation and the distributee shareholders were absolved of any tax consequences arising from the liquidation of the corporation.The reason: the entity’s brief stint as a corporation was, in the final analysis, disregarded for tax purposes.
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Under the LLC, no corporate-level taxes apply upon liquidation.