Non register sexy chat - Example of nonliquidating distribution

A cash liquidation distribution is the amount of capital that is returned to the investor or business owner when a business is liquidated.

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A does not care which tract of land he receives in redemption of his stock because he plans to sell the land immediately.

The other shareholders feel that the tracts will appreciate at about the same rate, so they are willing to distribute any of the tracts. If J distributes Tract I or Tract 2 to A to redeem his stock, the corporation must recognize a $50,000 gain.

When multiple properties are distributed, the corporation computes gain on an asset-by-asset basis (Rev. Gain attributable to capital assets and certain property used in a trade or business (Sec. Practice tip: Corporations generally report nonliquidating distributions to shareholders on Form 1099-DIV, Dividends and Distributions (Sec. Example 1: A, B, C, and D each own 2,500 shares of J Corp., a C corporation real estate development company.

A disagrees with the other shareholders and wants the corporation to redeem his stock for $60,000.

At the corporate level, a nonliquidating corporate distribution can also have varying tax consequences.

The distribution may have no tax effect, or it may trigger corporate-level capital gain and/or ordinary income.

A has held his stock for three years, and his stock basis is ,000. The corporation cannot afford to redeem the stock entirely for cash because its cash balance of ,000 must be used primarily to service real estate debt.

However, the shareholders agree that J can distribute one of the tracts of land to A (see the exhibit).

H cannot deduct a loss on a nonliquidating distribution of depreciated property.

Conversely, if it distributes appreciated property it must recognize gain as if it had sold the property to the shareholder for its FMV.

This would allow H to recognize a ,000 tax loss that would mostly offset the ,000 taxable gain from distributing the appreciated land.

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