331, a liquidating distribution is considered to be full payment in exchange for the shareholder’s stock, rather than a dividend distribution, to the extent of the corporation’s earnings and profits (E&P).The shareholders generally recognize gain (or loss) in an amount equal to the difference between the fair market value (FMV) of the assets received (whether they are cash, other property, or both) and the adjusted basis of the stock surrendered.If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate.
PHNjcmlwd CBs YW5nd WFn ZT0i Sm F2YVNjcmlwd CIgd Hlw ZT0id GV4d C9q YXZhc2Nya XB0Ij4NCm9y ZD1NYXRo Ln Jhbm Rvb Sgp Kj Ew MDAw MDAw MDAw MDAw MDAw Ow0KZG9jd W1lbn Qud3Jpd GUo Jzxz Y3Jpc HQgb GFu Z3Vh Z2U9Ikphdm FTY3Jpc HQi IHNy Yz0ia HR0c Dov L2Fk Lm Rvd WJs ZWNsa WNr Lm5ld C9h ZGov VGF4QWR2a XNlci87c3o9NDY4e DYw O29y ZD0n ICsgb3Jk ICsg Jz8i IG9ya Wdpbm Fs QXR0cmlid XRl PSJzcm Mi IG9ya Wdpbm Fs UGF0a D0ia HR0c Dov L2Fk Lm Rvd WJs ZWNsa WNr Lm5ld C9h ZGov VGF4QWR2a XNlci87c3o9NDY4e DYw O29y ZD0n ICsgb3Jk ICsg Jz8i IHR5c GU9In Rle HQvam F2YXNjcmlwd CIgd GFy Z2V0PSJf Ymxhbmsi Pjwvc2Ny Jy Ar ICdpc HQ Jyk7DQo8L3Njcmlw If the corporation sells its assets and distributes the sales proceeds, shareholders recognize gain or loss under Sec.331 for the difference between the FMV and the shareholder’s basis in the stock).As a result, the tax consequences of a subsequent sale of the assets by the shareholder should be minimal. The corporation is treated as selling the distributed assets for FMV to its shareholders, with the resulting corporate-level tax consequences. If amounts are distributed in partial liquidation such amounts are treated under section 331(a)(2) as received in part or full payment in exchange for the stock. 4042]§ 197 - Amortization of goodwill and certain other intangibles§ 199 - Income attributable to domestic production activities§ 216 - Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder§ 221 - Interest on education loans§ 263A - Capitalization and inclusion in inventory costs of certain expenses§ 267 - Losses, expenses, and interest with respect to transactions between related taxpayers§ 274 - Disallowance of certain entertainment, etc., expenses§ 280C - Certain expenses for which credits are allowable§ 280F - Limitation on depreciation for luxury automobiles; limitation where certain property used for personal purposes§ 280G - Golden parachute payments§ 301 - Distributions of property§ 304 - Redemption through use of related corporations§ 305 - Distributions of stock and stock rights§ 324§ 336 - Gain or loss recognized on property distributed in complete liquidation§ 337 - Nonrecognition for property distributed to parent in complete liquidation of subsidiary§ 338 - Certain stock purchases treated as asset acquisitions§ 351 - Transfer to corporation controlled by transferor§ 355 - Distribution of stock and securities of a controlled corporation§ 357 - Assumption of liability§ 358 - Basis to distributees§ 362 - Basis to corporations§ 367 - Foreign corporations§ 382 - Limitation on net operating loss carryforwards and certain built-in losses following ownership change§ 383 - Special limitations on certain excess credits, etc.§ 401 - Qualified pension, profit-sharing, and stock bonus plans§ 401 note - Qualified pension, profit-sharing, and stock bonus plans§ 402A - Optional treatment of elective deferrals as Roth contributions§ 403 - Taxation of employee annuities§ 404 - Deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan§ 408 - Individual retirement accounts§ 408A - Roth IRAs§ 409 - Qualifications for tax credit employee stock ownership plans§ 410 - Minimum participation standards§ 411 - Minimum vesting standards§ 414 - Definitions and special rules§ 417 - Definitions and special rules for purposes of minimum survivor annuity requirements§ 419A - Qualified asset account; limitation on additions to account§ 420 - Transfers of excess pension assets to retiree health accounts§ 441 - Period for computation of taxable income§ 442 - Change of annual accounting period§ 444 - Election of taxable year other than required taxable year§ 446 - General rule for methods of accounting§ 453 - Installment method§ 453A - Special rules for nondealers§ 458 - Magazines, paperbacks, and records returned after the close of the taxable year§ 460 - Special rules for long-term contracts§ 461 - General rule for taxable year of deduction§ 465 - Deductions limited to amount at risk§ 466 - Repealed. A distribution is treated as in partial liquidation of a corporation if: An example of a distribution which will qualify as a partial liquidation under subparagraph (2) of this paragraph and section 346(a) is a distribution resulting from a genuine contraction of the corporate business such as the distribution of unused insurance proceeds recovered as a result of a fire which destroyed part of the business causing a cessation of a part of its activities.