It is clearly provided in Section 73(A) of the code that the gain realized or loss sustained by a stockholder is a taxable income or a deductible loss.
At the CTA division level, however, the Court clarified that mere distribution of liquidating dividend on account of the dissolution of a corporation is not to be treated as sale for purposes of the imposition of capital gains tax.
The debt will remain until the statute of limitation has expired, and as there is no longer a debtor to pay what is owed, the debt must be written off by the creditor. The most senior claims belong to secured creditors who have collateral on loans to the business.
Assets are distributed based on the priority of various parties’ claims, with a trustee appointed by the U. These lenders will seize the collateral and sell it—often at a significant discount, due to the short time frames involved.
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. Solvent companies may also file for Chapter 7, but this is uncommon.
It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. Not all bankruptcies involve liquidation; Chapter 11, for example, involves rehabilitating the bankrupt company and restructuring its debts.