Liquidations and Dissolutions: Critical Tax Implications for Businesses

Description

In good economies and bad, owners close businesses, either permanently or to reorganize as new C corporations, S corporations, LLCs or partnerships. Tax advisors must stay constantly attuned to favorable or unfavorable federal tax ramifications to prevent surprises with the last return filed.

According to the IRS, the difference between an administrative dissolution and a liquidation transfer of assets to shareholders has major tax consequences. Beyond that, businesses must consider tax issues in converting to a new category of business entity and timing of asset sales to offset gains.

Staying current on federal regulations and guidance and integrating tax planning into the consideration of closing a business are critical to minimizing a tax bill on a substantial capital gain accumulated over time.

Listen as our panel of experienced tax advisors brings you up to date on the most important federal tax considerations in a business liquidation or dissolution.

Outline

1. Differences in dissolutions vs. liquidations
   1. When a company legally remains in business even though it has dissolved
   2. Whether a company’s status as a corporation is ended by an administrative dissolution
   3. Distribution of gains and losses to shareholders in a liquidation
   4. Taxation at both the business and shareholder levels in a liquidation
2. Tax issues of common transactions in a dissolution or liquidation
   1. Shareholder loans to a from a business
   2. Handling contingent liabilities
   3. Working with different state processes for dissolving a business
   4. Errors and omissions in a depreciation schedule
3. Possible tax planning issues
   1. Tax differences between repossession of assets for debt payment, and debt forgiveness
   2. Timing of sales of high-cost-basis assets at a loss to offset gains on sales of zero- or low-basis assets
   3. Timing sales of assets with payment of deductible business expenses, to avoid large Schedule F losses in one year and large gains in another
   4. Tax consequences of converting from C corporation to S corporation or LLC, and vice versa

Benefits

The panel will cover these and other relevant topics:

• Understanding the tax differences between administrative dissolution and liquidation, and whether it's possible for a business to close without suffering the tax bite of complete liquidation.
• Employing tax strategies to handle commonplace transactions such as shareholder loans to and from a business and contingent liabilities.
• Undertaking tax planning for higher-level issues — such as timing sales of high-cost-basis assets at a loss, sale of assets to offset payment of deductible business expenses, or a partner buyout through stock redemption.

Webinar/Teleconference

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CPE Credit

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