What is a liquidating dividend

If a person receives cash liquidating distributions that equal a sum that is less than his basis in the corporation's stock, he records a capital loss.

The length of time a taxpayer owns the stock issued by the liquidating corporation determines whether he records his capital gain or loss as short-term or long-term on his federal taxes.

Separate meetings of creditors and contributories may decide to nominate a person for the appointment of liquidator and possibly of supervisory liquidation committee.

Voluntary liquidation occurs when the members of a company resolve to voluntarily wind up its affairs and dissolve.

A corporation may render cash liquidating distributions in one or more installments.

If the total amount received by a stockholder exceeds the taxpayer's basis in the corporation's stock, he records a capital gain on his federal taxes.

A person's holding period begins the day after he acquires stock in a corporation and ends the day after he receives payment, or a final liquidation distribution, for the stock.

If a taxpayer holds a stock for one year or less, the IRS considers his capital gain or loss as short-term.

They will sell to a company that specializes in store liquidation instead of attempting to run a store closure sale themselves.In other words, the taxpayer must divide the number of shares he purchased in each transaction by the total number of shares he owns to determine the amount of his capital gain or loss.If the corporation decides to only partially liquidate its assets instead, the IRS requires the same stockholder to apply the amount he receives as a cash liquidation distribution against only the set of shares he wishes to redeem in exchange for the distribution.Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation.The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.

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