S corp liquidating distributions

24 Jul

351 transaction, or as a contribution to capital, within the five-year period ending on the date of distribution.

Any resulting corporate-level gain or loss is then passed through to the shareholder.

Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information.

C corporation rules provide that amounts received by a shareholder in a distribution in complete liquidation of a corporation are treated as full payment in exchange for the stock.

Generally, the rules relating to corporate distributions of property being treated as a dividend do not apply to any distribution of property by an S corporation in complete liquidation.

A recent trend with certain S corporations is the conversion of these corporations to a single member LLC or an LLC taxable as a partnership.

The new entity then continues the business of the S corporation.