This mainly occurs during voluntary liquidations of solvent corporations.A liquidating dividend is used when a corporation is dissolving and it needs to distribute its assets to its shareholders.
For complex returns, consult with a tax professional, such as a certified public accountant (CPA) or licensed attorney, as he can best address your individual needs.
Keep your tax records for at least seven years, to protect against the possibility of future audits.
John Cromwell specializes in financial, legal and small business issues.
Cromwell holds a bachelor's and master's degree in accounting, as well as a Juris Doctor.
The result is that the acquirer takes over the target and the former stockholders of the target company now become stockholders in the acquirer.