Liquidating distributions c corporation xml in net validating xml documents
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Distribution source and shareholders' basis for their corporate investment determine the tax consequences of distributions from S corporations.
Shareholders in an S corporation must keep careful track of their tax basis.
The amount of the tax basis determines the tax treatment of such items as flow-through losses and corporate distributions.
They also include provisions on the timing of basis adjustments, basis computations during a loss year, computation of individual stock basis and the categorization of debt as basis.
The consequences of distributions to the shareholders and the corporation are discussed further.
Other special rules concern the distribution of installment receivables, debt instruments held by shareholders.
Finally, there are some special considerations for unsuccessful corporations.
The Timing of Basis Adjustments All basis adjustments are deemed to occur on the last day of the corporation's tax year or on the date the shareholder sells his or her stock, if earlier.Stock Basis Rules Under the proposed regulations, the basis of stock is adjusted in the following order: Increases a.