Start S corp liquidating distributions

S corp liquidating distributions

Many funds point to the need for adequate cash reserves, insurance, and perhaps additional savings or government bonds before placing the remainder in a mutual fund.

The latter transaction, known as a stock redemption for tax purposes, is often the more common method of disposition in the S corporation context.

As a result, the client must be able to rely upon the skill of his or her attorney and advisers who hopefully fully understand the client’s objectives and the parameters of the proposed transaction, and who can thereby devise a structure that will accommodate most if not all of these issues, in the most cost and tax effective manner.

Please review this article with the idea that the solutions proposed may not be applicable to your particula fact situation.

This article is intended to provide significant insight into how to proceed to negotiate a sale or purchase of a business, and who to engage as part of your counsel and advisory team, without offering an entire treatise on the subject.

Please note that the mechanisms discussed in this article may be used to design other forms of purchase and sale transactions, such as sales between family members, or sales to key employees, however those form of transactions call into play a variety of other issues that may not be specifically addressed, and as a result, require their own independent evaluation.

To find out what your plan's rules are, read the Summary Plan Description your company provides you.

If you do not have one, ask your human resources department for another copy.

This article addresses some of the tax concerns for the shareholders of an incorporated entity that operates a business that is being sold to a third party.