Corporate nonliquidating

The result would be similar if Madison is a regular corporation, except that the tax would have to be paid at the corporate level.

However, in this case there would be a second tax at the shareholder level.

That's an problem if the shareholder wants to use the property in another business. We've also simplified the discussion by ignoring property that's encumbered by a loan.That will generate capital gain and restrict your deduction for losses generated by the corporation.The rules discussed above apply to nonliquidating distributions.If you're liquidating the company, you can generally recognize a loss.We haven't discussed partnerships and LLCs taxed as partnerships because the rules can be much more involved.