I am more than willing to pay extra for your time and patience.The stock basis is going to be what shareholders paid for the stock originally it sounds like. Did that dividend reduce that shareholder's stock basis per IRC 301 above?You don't want to give up your 1202 stock over this either... I would suggest the family work this out amongst themselves in general and keep the tax stuff nice and clean. Should you specifically want me or another expert to answer your question, you can request us and we'll generally answer if available (use the JA function or type "for so-and-so" at the beginning of your question. Thank you for your response, you clarified what I told the corp pres yesterday.I do check my e-mail and try to respond when available. This is between family and keep the tax stuff simple.The corporation has to pay the gains on the 'asset sale' while the shareholders receive liquidating distributions of cash (taxed at capital gains rates if in excess of their basis). What happens if a shareholder contributes ,000 (therefore starting with a basis of ,000), and I buy his shares for ,000. The corporation keeps track of E&P for dividend purposes per above (dividends are income to receipients out of E&P), but otherwise the liquidation is like a sale of the stock. We are down to the wire for tax law extensions, possibly, so we are trying not to miss anything.My basis then becomes ,000, but nothing has changed on the corporate balance sheet. Section 301 (relating to effects on shareholder of distributions of property) shall not apply to any distribution of property (other than a distribution referred to in paragraph (2)(B) of section 316 (b)) in complete liquidation.(1) Within 30 days after the adoption by the corporation of a resolution or plan for the dissolution of the corporation or for the liquidation of the whole or any part of its capital stock, make a return setting forth the terms of such resolution or plan and such other information as the Secretary shall by forms or regulations prescribe; and(2) When required by the Secretary, make a return regarding its distributions in liquidation, stating the name and address of, the number and class of shares owned by, and the amount paid to, each shareholder, or, if the distribution is in property other than money, the fair market value (as of the date the distribution is made) of the property distributed to each shareholder. I read and understood the reporting of corp liquidation. If all money is distributed and the 966 is filed with the IRS by the end of the year 12/31 will the liquidation be complete? The C-corp is a family business, the shares of stock are owned by a brother, sister and brother-in-law.I might have missed this answer - is there a list or an ordering of stock basis calculation?
Thank you for all your help and I do like Just Answers and will continue to send questions to you if okay.This is for 'regular' or non-liquidating distributions in general.The corp is sold and no longer doing business, so the liquidating dividend would be a sale of stock.I need to get a handle on the stock basis calculation.Dividends come first from earnings and profits of the corporation, then from the shareholders' individual bases, and then, finally, for dividends in excess of basis, shareholders recognize capital gain.