Liquidating an llc
Upon distribution of property in complete liquidation, the corporation is treated as if the distributed property is sold at FMV to the distributee (Sec.The distributee shareholder generally must recognize gain or loss equal to the difference between the FMV of the property received and his or her basis in the corporation's stock (Sec.Upon complete liquidation of a limited liability company (LLC) classified as a partnership, a distributee member generally does not recognize gain unless the cash and the fair market value (FMV) of marketable securities distributed exceed the outside basis in his or her LLC interest (Secs.(Note that this column addresses the complete liquidation of an LLC as opposed to liquidation payments made to a retiring member or a deceased member's successor in interest.) Likewise, no gain or loss is recognized by the LLC on a liquidating distribution (Sec.
While both entities provide owners with protection from liability, a corporation and its shareholders generally must both recognize gain or loss on liquidation.The person appointed as liquidator, either by the company directors/shareholders or by the creditors, sells off the company's ASSETS for as much as they will realize.The proceeds of the sale are used to discharge any outstanding liabilities to the creditors of the company.731(a)(1) when a member receives marketable securities that are treated as money in excess of the member's basis in his or her LLC interest (see Sec.In addition, gain may be recognized if (1) distributions of Sec.