Rcc liquidating corp 2016

Posted by / 07-Aug-2020 09:06

Thus, when you make distributions up to the amount of undistributed previously taxed income, they distributions are not taxed any further.

This rule applies whether or not the S corporation has E&P from C corporation tax years.

S corporation shareholders are taxed on income whether or not the earnings are distributed.

To summarize, the existence of C Corporation E&P simply means that distributions from the corporation in excess of undistributed previously taxed income (AAA) will be considered an ordinary dividend to the extent of C Corporation E&P.

Distributions in excess of accumulated E&P are treated as a nontaxable return of capital to the extent of the shareholder’s stock basis.

Distributions beyond that are treated as a sale of the shareholder’s stock, generally taxed as a long-term capital gain, depending on the holding period.

Tax implications of a C Corporation converting to an S Corporation There are basically two tax options for a corporation.

A regular corporation (or C corporation) pays tax on its earnings at the corporate level.

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Theoretically, E&P represents the corporation’s ability to pay dividends.

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