Liquidating distribution to c corp shareholders
97–248, § 222(e)(1)(B), struck out “partial or” before “complete liquidation”.
Some are clearly wrong, but we have made no attempt to correct them, as we have no way guess correctly in all cases, and do not wish to add to the confusion.
He studied electrical engineering after a tour of duty in the military, then became a freelance computer programmer for several years before settling on a career as a writer.
331, a liquidating distribution is considered to be full payment in exchange for the shareholder’s stock, rather than a dividend distribution, to the extent of the corporation’s earnings and profits (E&P).
Statements are normally issued to shareholders listing the fair market value of all assets distributed.
Selling a corporation involves both stock and the company's assets.
94–455 substituted “reference” for “references” in heading and struck out cross reference relating to general rule for determination of the amount of gain or loss to the distributee and substituted “section 1001” for “section 1002”. Do not assume that identically-titled documents are the same, or that a later document supersedes another with the same title. Release dates appear exactly as we get them from the IRS.
Note that the IRS often titles documents in a very plain-vanilla, duplicative way.
As of 2010, the federal tax rate for long-term capital gains was 15 percent, a rate favorable to those whose stock increased in value after purchase.
Corporations, however, do not receive such favorable terms when selling assets. Cash paid to shareholders upon liquidation is also taxable.