Corporate taxation nonliquidating distributions wii updating
A proportionate liquidating distribution is a distribution in which either (1) the partnership itself liquidates and distributes all of its assets to the partners or (2) a continuing partnership distributes assets to one or more partners in liquidation of those partnership interests. For distributions, the word does not refer to a distribution that is proportionate to all partners in the partnership (e.g., where each partner receives cash in proportion to the ownership percentage). Section 736(a) payments are generally either deductible the partnership (guaranteed payment) or result in a reduction of partnership income allocated to the continuing partners (distributive share). Guaranteed payments are taxed as ordinary income to the partner.
Liquidations of Corporations Other than 80% Owned Corporate Subsidiaries IX. The distribution can be to all partners, or it can be to a subset of the partner group. The distribution can be in the form of a periodic or a discretionary distribution determined the partners (any distribution that is not a liquidating distribution). Distributive shares are taxed according to the character of the income allocated to the partner. Liquidating cash payments paid for an interest in partnership property under 736(b) are considered a return of capital to the extent of a basis in his or her partnership interest.