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Form 966 online San Antonio Texas: What You Should Know
The federal tax consequences of filing Form 966 can be very severe. It is crucial to be aware of the legal requirements and ramifications when the opportunity to liquidate exists. There are different ways you can liquidate the corporation. Some examples are in the Corporate Dissolution section of the Handbook of Form 1120/1022 for Corporations (PDF). Alternatively, if you liquidate your corporate stock, the IRS will send you Form 1099-B — General Business and Professional License (PDF) for all profits, including your distributive share. Also, be aware that corporations typically file a 10-K on Form 1120/1022 once a year and Form 965 on an as-needed basis. See the Internal Revenue Manual: Forms 964 and 965 (PDF), Tax Guide: Instructions (PDF) and Form 965 — Corporate Transactions (PDF) for more details. If a corporation liquidates, then the federal tax consequence is simple: For any taxable year from the date of the corporation's dissolution or liquidations in the calendar year immediately preceding the filing of the corporation's tax return for the calendar year ending in the calendar year in which the dissolution or liquidations occur (which in effect is the end of the taxable year that includes the last day of such taxable year), the entire amount of any net capital losses, excess tax deductions, or net capital gain for such taxable year that do not exceed 4,000,000 for domestic corporations and 15,000,000 for foreign corporations, plus 5,000,000 for ordinary dividends paid to shareholders (and any portion of such dividends allocable to stock, if any), plus 12,500 for each net capital gain with respect to any capital assets sold (and any portion of such gain allocable to stock, if any), and plus any expenses of dissolution (including any penalties or other amounts) not otherwise included in income are deemed to be realized. On the other hand, if a corporation liquidates or is dissolved for any reason prior to the filing of its tax return for such year, there are some differences between those cases. Under those circumstances, the Corporation must file a form called Form 1128, Request for Certain Returns, Statement and Information. This form must contain the required information for figuring the amount of the tax that should be paid and must be filed and filed timely.
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