Liquidating real


The tax consequences of distributions by an S corporation to a shareholder depend on the shareholder’s basis in the S corporation stock.

Distributions to the shareholder are not included in the shareholder’s gross income to the extent that the distribution does not exceed the shareholder’s basis in the stock.

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A creditors voluntary liquidation (CVL) is one that is initiated by the directors of an indebted company as a way to concede to creditor pressures.

The directors appoint a licensed insolvency practitioner as liquidator and then a creditors' meeting is held so that creditors can review and approve the liquidation process.

Once the process is complete, the business is dissolved.

This is not the same as its debts being discharged, as happens when an individual files for Chapter 7.

This is done through a system of rules that track and adjust the shareholder’s stock basis.