Ad
related to: service credits vs liquidation distributions
Search results
Results From The WOW.Com Content Network
A liquidating distribution (or liquidating dividend) is a type of nondividend distribution made by a corporation or a partnership to its shareholders during its partial or complete liquidation. [1] Liquidating distributions are not paid solely out of the profits of the corporation. Instead, the entire amount of shareholders' equity is ...
(2) Liquidation distributions are required in all cases to be made in accordance with the positive capital account balances of the partners. [ 10 ] (3) Lastly, if a partner has a deficit balance in his capital account following the liquidation of his interest in the partnership, then he is unconditionally obligated to restore the amount of such ...
Liquidation of a partnership generally means that the assets are sold, liabilities are paid, and the remaining cash or other assets are distributed to the partners. When normal operations are discontinued, adjusting and closing entries are made. Thus, only the assets, liabilities and partners' equity accounts remain open.
At the current 30% rate, this works out at 0.30 of a credit per 70 cents of dividend, or 42.857 cents per dollar of dividend. The shareholders who are able to use them, apply these credits against their income tax bills at a rate of a dollar per credit, thereby effectively eliminating the double taxation of company profits.
The distribution of the additional profits from the S corporation will be done without any further FICA tax liability. If for some reason, Alex (as the majority owner) were to decide not to distribute the money, both Alex and Jesse would still owe taxes on their pro-rata allocation of business income, even though neither received any cash ...
Required minimum distributions (RMDs). Required minimum distributions are the minimum amounts you must take when you hit a certain retirement age — that’s 70 to 75, depending on your birth year.
Any distribution from the earnings and profits of a C corporation is treated as a dividend for U.S. income tax purposes. [6] "Earnings and profits" is a tax law concept similar to the financial accounting concept of retained earnings. [7] Exceptions apply to treat certain distributions as made in exchange for stock rather than as dividends.
Get AOL Mail for FREE! Manage your email like never before with travel, photo & document views. Personalize your inbox with themes & tabs. You've Got Mail!