Payroll Dictionary
Liquidation of corporation
Complete liquidation of a corporation is the winding up of its affairs by the settling of its accounts, the paying of all debts, the collecting of assets and the turning of the remainder over to the shareholders in exchange for their stock. Complete liquidation precedes dissolution of the corporation and is not entirely synonymous with it. A partial liquidation is a calling in of a part of the stock, with or without cessation of a part of the corporate activities. Special rules apply to the sale by a corporation of its assets as a step in liquidation, and to the treatment of liquidation distributions received by the shareholders.