[joonpark1212]

Regarding C-corp cash distribution(non-liquidating and liquidating), I understand the capital gain that the shareholder recognizes due to the cash distribution, but does c-corp recognize anything in this transaction and will show up in form 1120?

I can’t draw the big picture for c-corporation point of view.

Any advise would be appreciated.

[Anonymous]

No – no gain or loss will be recognized by the corporation if it is merely distributing cash from the corp. If it sells an asset and then distributes cash then it will be taxed on the sale of the asset.

[zxu2v2]

From the Corporation points of view, if it distribute
cash – no gain/loss
(appreciated) property – recognized FMV – adjusted basis as gain

[Anonymous]

Dividends do not cause capital gain. They r a distribution of corporate profits. Nothing to do with capital gains.

C corp dividends are on the 1120 schedule L as a reduction to equity.

[joonpark1212]

First of all thank you for the explanation. For the better understanding could someone please explain to me the below question.

Q. ABC Corporation distributes land with a FMV of $100,000 (Adjusted basis of $75,000) to Anna when the corporation's E&P is $350,000. Anna is the sole shareholder. What basis does Anna take in the land and what amount of gain does ABC Corporation recognize, respectively, as a result of this nonliquidating property distribution?

A. $100,000 ; $25,000.

Where would the recognized gain of $25,000 show on ABC Corporation's 1120?

Can't find it in my CPA material… thank you in advance!

[Anonymous]

You would have a debit to dividend of 100k. A credit to land 75k and a credit to gain 25 k

Assuming the land was held long term it would go on line 8 of 1120 and if held short term line 9. It would also show on other applicable forms 4797 one or sched d

Important to note c corps have no preferential tax rates for capital gains

[joonpark1212]

@C9p9a9

Thank you so much. You helped me save two days worth of studying time!

[Author]

Replies