Discussion:E&P
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Basic Tax Questions --> E&P
Discussion Forum Index --> Tax Questions --> E&P
| 19 August 2008 | |
| how does a CPA keep track of the E&P of a C corp and where is it reconciliated on the 1120 so the IRS knows what it is on liquidation . Also doe a C corp send a 1099-DIV for all the money and assets distributed to the shareholders or only the amount of the E&P | |
| 19 August 2008 | |
| I haven't done an E&P calculation for a few years, but I don't think much has changed.
E&P is not reported to the IRS on the 1120. In theory, a taxpayer or his accountant keep track of E&P each year and retain the records in their files. In reality, most people don't keep track of it until they need it, such as when they need to know how much, if any, of a distribution is a dividend vs. return of capital. The distribution is a dividend to the extent of E&P. Retained earnings are NOT the same as E&P, but it is often a close approximation. If the distribution is far less than the retained earnings, for example, you probably have plenty of E&P and the distribution is a dividend which you should report on the 1099-DIV | |
| 19 August 2008 | |
| when I liquidate a c corp they filed a 966 with their notorized statement. I then file the 1120 and if a loss I would file an 1139. anything else you have to do other than contact the state? | |
| 20 August 2008 | |
| In a liquidation of a domestic corporation with an individual as a shareholder, the amount of E&P is unimportant. The individual shareholder is taxed on any gain in the shares regardless of the amount of the E&P. Sec. 331 The corporation also may have gain or loss under Sec. 336. | |
| 20 August 2008 | |
| are you suggesting therefore that the corp does not issue a 1099-DIV to the stockholders? | |
| 20 August 2008 | |
| Yes, the 1099-Div is issued. Complete boxes 8 and 9 for liquidating distributions. | |
| August 20, 2008 | |
| I'm not sure if you're interested in this, but there is probably some legal requirement to notify the public that the corp is liquidating. | |
| August 20, 2008 | |
| A complete liquidation for tax purposes need not be a dissolution for corporate law purposes. | |
| August 21, 2008 | |
| Thank you for that clarification, LH. Does that mean corporations can liquidate without having to provide any notice to creditors or the state? | |
To join in on this discussion, you must first
log in.
