Forms for liquidating an s corporation

T recognizes a ,000 gain on Block 1 (,000 – ,000 basis) and a ,000 loss on Block 2 (,000 – ,000 basis).If T receives ,000 in 2007 and an additional 5,000 in 2008, each distribution is allocated ratably between the blocks based on the number of shares in each block.Long-term or short-term classification of a liquidation that qualifies for capital gain treatment depends on the shareholder’s holding period, with long-term status having significant importance due to the 15% tax rate cap on long-term capital gains.Shareholders in the 35% tax bracket achieve a 57.1% ((35% – 15%) ÷ 35%) tax savings on capital gain versus ordinary income.

The shareholder’s basis in assets received is their FMV at the time of the distribution. A distribution in partial liquidation of an S corporation will also qualify for sale or exchange treatment under § 302 if the distribution is pursuant to a plan and occurs within the tax year the plan is adopted or the following tax year and the “safe harbor” of § 302(e)(2) is met.

T recognizes a ,000 gain on Block 1 (,000 –

The shareholder’s basis in assets received is their FMV at the time of the distribution. A distribution in partial liquidation of an S corporation will also qualify for sale or exchange treatment under § 302 if the distribution is pursuant to a plan and occurs within the tax year the plan is adopted or the following tax year and the “safe harbor” of § 302(e)(2) is met.T recognizes a ,000 gain on Block 1 (,000 – [[

The shareholder’s basis in assets received is their FMV at the time of the distribution. A distribution in partial liquidation of an S corporation will also qualify for sale or exchange treatment under § 302 if the distribution is pursuant to a plan and occurs within the tax year the plan is adopted or the following tax year and the “safe harbor” of § 302(e)(2) is met.

T recognizes a $45,000 gain on Block 1 ($45,000 – $0 basis) and an $80,000 gain on Block 2 ($90,000 – $10,000 basis).

The character of gain or loss recognized by the S shareholder depends on whether the stock is a capital asset in the shareholder’s hands and whether the transaction constitutes a complete or a partial liquidation.

Thus, accumulated earnings and profits (“AE&P”) or accumulated adjustments accounts (“AAA”) are not relevant to the characterization of the liquidating distribution.

Since the existence of AE&P has no impact on the characterization of a liquidating distribution, an S corporation with AE&P should identify liquidating distributions as such (for example, in a board resolution adopting the plan of complete liquidation).

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The shareholder’s basis in assets received is their FMV at the time of the distribution. A distribution in partial liquidation of an S corporation will also qualify for sale or exchange treatment under § 302 if the distribution is pursuant to a plan and occurs within the tax year the plan is adopted or the following tax year and the “safe harbor” of § 302(e)(2) is met.T recognizes a $45,000 gain on Block 1 ($45,000 – $0 basis) and an $80,000 gain on Block 2 ($90,000 – $10,000 basis).The character of gain or loss recognized by the S shareholder depends on whether the stock is a capital asset in the shareholder’s hands and whether the transaction constitutes a complete or a partial liquidation.Thus, accumulated earnings and profits (“AE&P”) or accumulated adjustments accounts (“AAA”) are not relevant to the characterization of the liquidating distribution.Since the existence of AE&P has no impact on the characterization of a liquidating distribution, an S corporation with AE&P should identify liquidating distributions as such (for example, in a board resolution adopting the plan of complete liquidation).

]] basis) and an ,000 gain on Block 2 (,000 – ,000 basis).The character of gain or loss recognized by the S shareholder depends on whether the stock is a capital asset in the shareholder’s hands and whether the transaction constitutes a complete or a partial liquidation.Thus, accumulated earnings and profits (“AE&P”) or accumulated adjustments accounts (“AAA”) are not relevant to the characterization of the liquidating distribution.Since the existence of AE&P has no impact on the characterization of a liquidating distribution, an S corporation with AE&P should identify liquidating distributions as such (for example, in a board resolution adopting the plan of complete liquidation).

basis) and an ,000 gain on Block 2 (,000 – ,000 basis).

The character of gain or loss recognized by the S shareholder depends on whether the stock is a capital asset in the shareholder’s hands and whether the transaction constitutes a complete or a partial liquidation.

Thus, accumulated earnings and profits (“AE&P”) or accumulated adjustments accounts (“AAA”) are not relevant to the characterization of the liquidating distribution.

Since the existence of AE&P has no impact on the characterization of a liquidating distribution, an S corporation with AE&P should identify liquidating distributions as such (for example, in a board resolution adopting the plan of complete liquidation).

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