What is a liquidating distribution

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The Timing of Basis Adjustments All basis adjustments are deemed to occur on the last day of the corporation's tax year or on the date the shareholder sells his or her stock, if earlier.

Her current taxable income from the corporation would be 7,700.The consequences of distributions to the shareholders and the corporation are discussed further.Shareholders in an S corporation must keep careful track of their tax basis.The amount of the tax basis determines the tax treatment of such items as flow-through losses and corporate distributions.Many S shareholders have two investments in the corporation - the investment in corporate stock and loans made to the corporation.

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