Liquadating c corporation
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In some cases, the courts have ruled that withdrawals from two closely held corporations were constructive corporate distributions rather than loan proceeds and repayments. Dividends may be formally declared or they may be constructive. Withdrawals from each layer have different tax consequences. Corporate Distribution Basics For federal income tax purposes, non-liquidating distributions paid by C corporations to individual shareholders can potentially fall into three different layers.here can be negative tax consequences when purported loan payments are recast as corporate distributions to shareholders.The courts have ruled that withdrawals from two closely held corporations were constructive corporate distributions rather than loan proceeds and repayments in some cases.