In general, all final-expense transactions should occur within the same year you file for dissolution.You need to calculate your final expenses for the business.There is some money remaining for final distribution to two key shareholders (k) plus a buffer amount for expenses (k). The buffer amount will be paid out for legal and accounting work. Do I report the legal/accounting payments on a 10 even though we may pay those bills in early 2013? Claims for deductions under the cash method may only occur when corporate taxpayers actually make payment before year-end and only if payment does not create an asset with a useful life lasting longer than 12 months. You can treat taxes and other accrued expenses as deductions on the final year cash basis tax return 2012. However, there may be a time limitation as to when those expenses need to be paid in 2013.Final expenses may include outstanding accounts payable, wages, taxes and depreciation. In addition, expenses you incur for liquidation are deductible, with the exception of reorganization costs, costs to resell or redeem the corporation’s stock and liquidation expenses paid by shareholders.Generally, the expenses incurred to liquidate a corporation are deductible.
If you receive distributions from the corporation in complete liquidation, you must divide the distribution among the blocks of stock you own in the following proportion: the number of shares in that block over the total number of shares you own.
Dear Kathy: I had purchased Incentive Stock Options back in 2000. It was getting a cash distribution from another company for last few years; 2003 onwards.
Every year it would get money, it would deduct 44% State and Federal taxes and give 56% to share holders per their share in the company. Ricky - Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation.
A buyer will almost always favor an asset sale, because they are able to step-up the tax basis in the assets to the purchase price, which then reduces the future taxes, due to being depreciated at the new stepped-up value.
In many cases, this helps the buyer with the cash flow to make the acquisition.