Liquidation and Dissolution

In: Business and Management

Submitted By Tweetybird757
Words 1060
Pages 5
Running head: LIQUIDATION AND DISSOLUTION
Liquidation and Dissolution
Instructor:
ACC 317 Advanced Federal Taxation
April 29, 2012

Abstract
In discussing the differences between a corporation that is liquidated and one that is dissolved, I will be defining the terms and what the causes are for a Corporation. You will come to find out there is a difference between the two; the differences you find are mainly used for Tax Purposes. Liquidation refers to the complete sale of the business assets, whereas Dissolution refers to the closure of a business, usually on voluntary terms of the business proprietor. When dealing with the process of either situation your assets should be of a focusing concern, but these are all things that will be discussed throughout the dissertation.

The difference between a corporation that is liquidated and one that is dissolved is Liquidation is when company debts and other liabilities exceed its assets; or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any odds and ends are distributed to pay off the shareholders. When a corporation is completely liquidated, it transfers all of its assets to its shareholders whether the assets are cash or property and the shareholders assume the corporation's remaining liabilities. Liquidation sales take place in various formats, including negotiated buyouts, consignment sales and auctions. Whereas Dissolution refers to the closure of a business, usually on voluntary terms of the business proprietor. This means termination of an agreement, contract, corporation, or partnership it requires the payment of all local, state and federal taxes and the subsequent closure of each of these tax accounts. It is essential to close all tax accounts, as the business will be liable for tax filings, even if operations have ceased.
For tax purposes, Corporations assets…...

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