Liquidating distributions c corporation dating old mountain dew bottles
Sales of stocks produce either a capital loss or gain.
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.
The corporation must recognize a gain on any appreciated property.
Depreciation is recaptured on the basis of the fair market value of the assets.
The directors then prepare and adopt a resolution giving the board and the company's officers the authority to execute the liquidation.
Statements are normally issued to shareholders listing the fair market value of all assets distributed.
Because the income of S corporations is taxed to the owners when the income is earned, a mechanism is needed to ensure that the shareholder is not taxed again when the earnings are distributed.
This is done through a system of rules that track and adjust the shareholder’s stock basis.
The final corporate tax return is due no later than the 15th of the third full month after the dissolution, which is also the due date for any corporate income tax due.
Regardless of whether you are closing the business, converting to another type of entity or selling the corporation, certain documents are normally requested by the IRS if a liquidation occurs.
The directors should adopt a resolution recommending liquidation, and the shareholders should adopt a resolution approving the recommendation.
Other forms of ownership, such as limited liability partnerships, have replaced the traditional C corporation structure for many small businesses.
If you decide to change to another form of business organization, close your operations permanently or sell your business to another, you will likely need to liquidate the corporation.