Tax implications of liquidating a corporation list german dating sites

08-May-2019 02:38

The Company’s stockholders, on the other hand, may not want to structure the transaction as an asset sale because (i) if the Company is a C corporation, the Company will be subject to tax on its gain from the sale, and the stockholders will then also be subject to tax on gains they have when they receive the net proceeds of the sale from the Company, so that there can be taxable gain from the sale at both the Company and stockholder levels, or (ii) if the Company is an S corporation, some or all of the Company’s gain may be reportable by the stockholders as ordinary income depending on the Company’s assets and the allocation of the purchase price (and, if the Company holds assets with built-in gain subject to tax under Code Section 1374, the built-in gain will be subject to tax at both the Company and stockholder levels, with a deduction for the stockholders of the tax payable by the Company). The aggregate purchase price is allocated among the various Company assets by class and fair market value under rules set forth in the Regulations under Code Sections 1060 and 338.Particularly if the Company is an S corporation, the Company’s stockholders will prefer to allocate the purchase price so as to maximize the amount of their income from the sale that is long-term capital gain.

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” I always find it interesting, maybe even ironic that the term “Complete Liquidation” is not defined in the Internal Revenue Code, and nor is it defined in the applicable Section 331 regulations.The United States Tax Court generally applies a three part test in determining whether there was a plan to liquidate: 1) Was there a manifest intent to liquidate; 2) Was there a continuing purpose to terminate corporate affairs and dissolve; and, 3) Were the corporate affairs confined and directed to the purpose of liquidation.