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C-Corp Help

Posted on 8/5/13 at 1:53 pm
Posted by crazycajun10
Member since Jun 2011
64 posts
Posted on 8/5/13 at 1:53 pm
Got a question about corporations and liquidations.

Here is the scenerio: Got a C-corp with 5 equal shareholders. Assets are around $300,000 with 75% of this being land. Shareholders are getting old and would like to sale the land.

Question: Is there a way to avoid doulble taxation of the gain on the sale?

I have researched liquidations but if I understand it correctly, the tax on this is the same as selling the assets through the corporation. Am I missing something here?

Thanks for the help!
Posted by GreenTrout
Toledo Bend
Member since Jul 2013
1010 posts
Posted on 8/5/13 at 2:27 pm to
I would say pay dividends but that wouldn't work, it would just be at a lesser tax rate.

You could, and I'm not 100% on this, decrease your share of ownership in your corp.

Entry would look something like

DR: Cash 60,0000
CR: Investment(C-Corp) 60,0000

If I remember correctly that's tax free, but I don't know if it works with C-Corps.
This post was edited on 8/5/13 at 2:28 pm
Posted by Poodlebrain
Way Right of Rex
Member since Jan 2004
19860 posts
Posted on 8/5/13 at 3:22 pm to
Getting property out of a corporation is almost always a taxable event. The corporation has to not have and earnings and profits from which to pay dividends. The shareholders need more adjusted basis in the corporate stock than the FMV of the property being distributed. Otherwise, there will be some income recognized.
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