C-Corp Dissolution


S

Sue

I'm looking for advice on how to dissolve a C-Corp. The corporation in
question is a Personal Holding Company. It was owned by one individual who
recently passed away. It is now owned by 2 heirs who would like to dissolve
it. How would one go about doing this, and what would the tax consequences
be? My thought is that all of the investments would be liquidated, and any
capital gains tax would be paid by the corporation. Then liquidating
distributions would be paid to the heirs. The heirs would pay capital gain
tax on any increase in value since the date of death.

Thanks for any advice.
 
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R

Richard Macdonald

Sue said:
I'm looking for advice on how to dissolve a C-Corp. The corporation in
question is a Personal Holding Company. It was owned by one individual who
recently passed away. It is now owned by 2 heirs who would like to
dissolve it. How would one go about doing this, and what would the tax
consequences be? My thought is that all of the investments would be
liquidated, and any capital gains tax would be paid by the corporation.
Then liquidating distributions would be paid to the heirs. The heirs would
pay capital gain tax on any increase in value since the date of death.
This one is tricky for first thing in the morning with no research. My first
concern would be since the assets of the holding company are not in the
name of the decedent that they will not get a step up to date of death
value.

If so, only the holding company stock receives the step up to date of death
value and that the only way to transfer that step up would be to distribute
the invested assets of the corporation in a liquidating distribution for the
stepped up stock in the holding company. Any sales within the corporation
most likely would have to use their original basis and not DoD Basis.

Any other thoughts and concerns?
 
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