H c liquidating corporation

Section 336 provides that, with the exception of property distributed to a parent in complete liquidation of a subsidiary, gain or loss is recognized to a liquidating corporation on the distribution of property in complete liquidation as if such property were sold to the distributee at the fair market value.

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There are two exceptions found in Sections 332 and 338.For the corporation in the process of complete liquidation, Sections 336 and 337 govern the tax results.The general rules relating to complete liquidations are covered in Section 336 which provides that gain or loss is recognized to the distributing corporation.Losses will be disallowed on distributions to related parties in either of the following cases: 1) the distribution is not pro rata or 2) the property distributed is disqualified property.Disqualified property is defined as property acquired by the liquidating corporation in a Section 351 transaction or as a contribution to capital during a five-year period ending on the date of the distribution.

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