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One of the things that could apply has to do with a withholding requirement known as FIRPTA withholding.This requirement to withhold can be triggered whenever more than 50% of the fair market value of a foreign-owned domestic corporation’s assets are U. real property and a sale of the stock of the corporation or distribution (including liquidating distributions) has taken place.While there are several reasons for doing this, one reason is to eliminate the double taxation feature of corporations.As part of the conversion, the assets owned by the corporation must first be transferred to the shareholders in exchange for stock.
Possible reasons requiring liquidation are the closing or sale of the business or changing the business structure to provide more favorable tax treatment.
When a corporation ceases its business operations, all assets owned by the company must be distributed.
This process is known as liquidation and is necessary, even in cases when the corporation is being sold or converted into a different business structure.
Corporations are the most widely known business forms, providing limited liability to shareholders and allowing ownership to be freely transferred through the buying and selling of stock.
C corporations are also subject to what is known as "double taxation." This type of tax treatment means that income and gains on property are taxed first at the corporate level and then again at the individual shareholder level for any dividends received.