C11-Chp-13-1F-Sell assets and liquidate

C11-Chp-13-1F-Sell assets and liquidate -...

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37b3b3b94a4d94dd0cff50f6252acedeae4b9114.xls Page 1 of 2 Jan and Joe each own 50% of Local Co. Each has a basis of $14,000 in the entity. There is no debt. There is no built-in gain. Huge corporation buys the land at FMV. The business pays any federal income tax and liquidates. This is the only transaction in the year. There is no liquidating expense. Assets Basis FMV This analysis is for Jan Cash $10,000 $10,000 who owns 50% of company. Land $20,000 $60,000 Total $30,000 $70,000 C Corp S Corp Ptship 1 Gain reported by Local Co. on sale of land $40,000 $40,000 $40,000 2 Tax paid by Local Co. on gain from land sale 3 Flow through gain for Jan 4 Jan's adjusted basis in entity 5 Cash distributed to Jan 6 Ordinary income reported by Jan 7 Capital gain reported by Jan C Corporation - Liquidations 1 Gain realized is Amount Realized (FMV) in excess of Basis 1001 2 Corporation pays tax at regular tax rates on the gain. No special capital gain rate. 11 b 3 There is no flow-through of gain or loss to shareholder of a C corporation 4 There is no change in basis of the stock 1012 5 Jan will receive half of the cash available after payment of corporate income tax 6 Amount received by S/H in a liquidation is treated as selling price. No dividend income 331 7 Stock is a capital asset, and liquidation results in capital gain or loss
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C11-Chp-13-1F-Sell assets and liquidate -...

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