Property-vs-cash-distribution-from-Corporation - Property...

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Property vs. cash distributions from your corporation Have you ever thought about distributions of property dividends (rather than cash dividends) from your corporation? In some situations, it makes sense to distribute property in lieu of cash for a variety of reasons. However, before you make the decision as to the form of any distributions from your company, you should consider the various tax consequences of such distributions. A corporation can make a distribution of a “dividend in kind” — which is a property distribution. For such purposes, a distributing corporation’s stock and rights for such stock acquisition are not considered to be property. Dividend distributions in these forms are not treated as income that is taxable to the corporation’s shareholders, with some important exceptions (e.g., distributions made instead of money; certain distributions made on preferred stock; distributions that are disproportionate; etc.). A whole host of items can form the basis for your company’s next property dividend: bonds issued by the government; real property; the distributing corporation’s bonds; another corporation’s bonds; assumption of the indebtedness to a third party of a shareholder;
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This note was uploaded on 10/03/2011 for the course BUSINEES 430 taught by Professor Ross during the Spring '08 term at New York Institute of Technology-Westbury.

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Property-vs-cash-distribution-from-Corporation - Property...

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