In United Kingdom and United States law and business, liquidation is the process by which a company (or part of a company) is brought to an end, and the assets and property of the company are redistributed.Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation.The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below).With the current low tax rates applied to qualified dividends received on or before December 31, 2010, and the possibility of these rates being increased sooner under an Obama presidency, it is critically important for both C and S corporations (and their shareholders) to understand the ordering rules and tax ramifications of corporate distributions fully — before they are made.General Definitions The controlling definitions, which impact the tax treatment for C and S Corp shareholders include: (DRD) In general, dividends received by a corporate stockholder from an affiliated domestic corporation will be able to exclude 100 percent of such dividends received (on the theory the profits have already been subject to corporate-level taxation).It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business, Upon hearing the application, the court may either dismiss the petition, or make the order for winding-up.The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.
As sole shareholder closing down the corporation how do I report my,500 non dividend distribution which results in Hello, Thanks for your queston. If not, the following applies: Yes, you would report the 00 as a capital gain.
To the extent the recipient owns at least 20 percent of the corporate payor's stock, the dividend is generally eligible for an 80 percent DRD and most other domestic dividends are eligible for a 70 percent DRD.
The characterization of distributions from a C Corp will be generally determined at the end of the tax year, rather than at the point when the distribution is actually made.
Tax Treatment of S Corporation Liquidations Under Code Sec.
1371, except as otherwise provided in the Code, and except to the extent inconsistent with subchapter S, the provisions relating to C corporations apply to an S corporation and its shareholders.
You would need to report the 00 non-dividend distribution on Form 1099-DIV, Box 3.