Nonliquidating distribution of
If the stock is a capital asset in the hands of the shareholder, the shareholder has a capital gain or loss on the exchange.
The maximum tax rate for both long-term capital gains (realized after May 5, 2003, and before 2013) and dividends (for tax years beginning after 2002 and before 2013) is 15%.
Preferred and common shareholders receive any remaining assets, respectively.
As company operations end, remaining assets go to existing creditors and shareholders.
Each of these parties has a priority in the order of claims to company assets.
If the stock is a capital asset in the shareholder’s hands, the transaction qualifies for capital gain or loss treatment.
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A liquidating dividend is a type of payment that a corporation makes to its shareholders during a partial or full liquidation.