Because the tax consequences of distributions depend on the shareholder’s basis, it is important to keep up with changes in the shareholder’s basis over time.
Because the income of S corporations is taxed to the owners when the income is earned, a mechanism is needed to ensure that the shareholder is not taxed again when the earnings are distributed.
person (including a foreign corporation) is generally subject to the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). 897(h)(1) or being exempt from taxation under Code Sec. Such regulations, if issued, would apply to distributions occurring on or after June 13, 2007.
person is generally not subject to FIRPTA (or other U. The stated purpose of Notice 2007-55 was to discuss what the IRS viewed as the inappropriate treatment by foreign governments of certain distributions from DCRs to such foreign governments as not being subject to tax under Code Sec. 897(h)(1) includes a liquidating distribution from a DCR attributable to gain from the sale or exchange of a USRPI.
When a company has more liabilities than assets, equity is negative and no liquidating distribution is made at all.
This is usually the case in bankruptcy liquidations.