Consequences of liquidating
Further, shareholders are permitted to recover their entire basis in a block before reporting gain. More to the point, notwithstanding the dissolution and reincorporation, no new corporation is deemed to come into existence so the corporate taxpayer is not required to apply for a new Employer Identification Number.
A loss from the liquidation, garners different treatment. For that reason, it is well-settled that a liquidation can occur without a formal or legal dissolution and, now, thanks to LTR 200806006, we also know that a dissolution—which does not give rise to an automatic transfer of the dissolved corporation’s assets to its shareholders—also does not give rise to, in and of itself, a complete liquidation.
If the power to sell isn’t stated in the will, you must get approval of the probate court for the sale of real estate held in the decedent’s name.
(See Bittker and Eustice, Federal Income Taxation of Corporations and Shareholders at Para.
Liquidating — distributing or selling — estate assets is one of the primary responsibilities of an estate administrator.
Conversely, the stockholders record a loss (also, almost always a capital loss), if the net distribution is less than their adjusted basis in the stock surrendered in the transaction. Indeed, in that situation, the tax consequences spelled out in ( Section 331(a) and Section 336(a) will not be visited on the shareholders and the corporation, respectively.** Federal Law Governs The ruling concludes that the “core test of corporate existence,” for purposes of federal income taxation, is always, a matter of federal law.
The transaction is treated somewhat differently if a shareholder owns more than one block of stock, and receives a series of distributions in complete liquidation. To be sure, since the state law in the IRS example brought about an automatic transfer (to its shareholders) of a dissolved corporation’s assets, it followed that the company’s dissolution did not give rise to a complete liquidation.
A fine line exists between definitions of a corporate liquidation and dissolution.
But for tax purposes, the defining line can make a big difference.
There are two possible scenarios when liquidating securities: The quickest way to sell real estate at the highest price is to have the property listed with a reputable broker.
Choose a broker who has comparable properties to back up the price he or she proposes for your property.
When liquidating real estate, you should always hire a broker and obtain any necessary probate court approval.
If the decedent specifically bequeaths or devises an asset, or leaves a piece of real estate by will, the executor or administrator can’t sell it unless it’s necessary to pay the decedent’s debts or estate expenses.
There are several possible reasons for liquidating assets before distribution of the estate residue (what’s left over after paying all debts, expenses, taxes, and specific bequests and devises) including: Most stocks, bonds, and other securities are held in brokerage accounts.