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  • 1.  Complete liquidation

    Gold Most Valuable Member
    Posted 11-28-2014 10:37 AM
    This message has been cross posted to the following Discussions: ncCPAp on the GO! and NASSAUSUFFOLK .
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    Can a C corporation qualify for a complete liquidation if it will be collecting installment payments for 4 years? It has ceased operations and would otherwise qualify for complete liquidation treatment.
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    Richard Finelli
    RICHARD A. FINELLI, CPA PC
    Babylon NY
    631-482-9400     
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  • 2.  RE: Complete liquidation

    Platinum Most Valuable Member
    Posted 11-28-2014 11:41 AM
    Rich two issues

    First This is a fed Tax question, and should be posted to the " fed tax " discussion center.

    second  - your issue

    Here is how I read it -   old law  -  No G Or L on Corp assets distributed to shareholder in complete liquidation. This included installment notes acceleration of deferred income.

    new law  -  the non-recognition rules of liquidation have been repealed. accordingly, the corp will recognize g or L on the distribution of assets to shareholders in complete liquidation. Also,  because it is a taxable transaction, the corp will accelerate the deferred income on the note once it is distributed.

    ck this out from the IRM       http://www.irs.gov/irm/part4/irm_04-011-007.html       do a search for installment

    let me know if you hear differently


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    Abby Alhante
    KURCIAS & ALHANTE, CPAs LLC
    Woodbury NY
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    Original Message


  • 3.  RE: Complete liquidation

    Platinum Most Valuable Member
    Posted 12-01-2014 10:49 AM
    Rich:

    I agree with Abby. The corporation will effectively realize gain based on the excess of the FMV of it's assets over it's adjusted basis. Basically, the installment gain is accelerated. You may have to check to see if the notes can be assigned and the shareholders will continue to pick up the interest income on the notes, as well as recognizing and gain or loss on the liquidation.

    You will see whether it makes sense to keep the corporation open, and if so, for how long. If you have a large gain in the year of sale, it may makes sense to liquidate in the following year.

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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY
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    Original Message


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