Nonliquidating distribution of
This mainly occurs during voluntary liquidations of solvent corporations.There can be negative tax consequences when purported loan payments are recast as corporate distributions to shareholders.
If money is left after paying bondholders, stockholders are paid a portion of the money.
If the amount the investor receives is less than their original cost basis invested in the stock, the investor may report a capital loss which reduces their tax bill.
In either a liquidating or a nonliquidating distribution, a distribution of cash to the shareholder will only decrease the shareholder's stock basis by the amount of cash distributed. Accordingly, if the corporation has any outstanding debts, it should pay off those debts with cash to reduce the amount of cash to be distributed to.… continue reading »
Nov 3, 2017. proposition that a corporation was not taxable on the distribution of appreciated property to its shareholders. • In 1954, Congress codified the General Utilities doctrine by enacting corporate-level nonrecognition rules for nonliquidating distributions. old section 311, liquidating distributions old section 336.… continue reading »
Answer to Close Corp. distributed cash and a parcel of land in a nonliquidating distribution to its sole shareholder. The followin.… continue reading »