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Video instructions and help with filling out and completing What Is Irs Form 966

Instructions and Help about What Is Irs Form 966

Hi class were on chapter six now which covers corporate liquidating distributions now in our last chapter chapter four we talked about non liquidating distributions in this case we have a company that's going to is going to distribute all of its assets and liabilities and pay off all of its liabilities so it's essentially going to liquidate and then it may actually shut down after it liquidates it may dissolve it's as a corporate entity now this situation awry arises when the management decides that they no longer want to operate the corporation for a number of reasons and there are two ways that you can shut down a corporation you can sell all of the assets first and pay tax on the gain and then distribute the cash that you received on sale of the assets and any remaining cash that you had outside of the sale to your shareholders in that case the corporation is paying tax on the gain on sale of its assets and then the shareholders are paying tax on the distribution as well because it's either going to be treated as a dividend to the extent of enp of corporate EMP or it's going to be retreated as a return of basis and then because they're the corporation is liquidating the basis is always going to get reduced down to zero and whatever is distributed to the shareholders in excess of basis is going to be treated as capital gain so you can see in the first situation that there's been a that the situation of selling the assets first and then distributing the leftover cash creates double taxation on the other way that you can shut down a corporation is by distributing the corporate assets to the shareholders and in that case...

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