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Although it is possible to avoid a complete liquidation through joint ventures or parallel operations, the IRS might rule that the corporation has been constructively liquidated, resulting in additional tax.

Forming a C corporation was once the only way the owner of a small business could shield himself from the debts and liabilities of the company.

Corporations, however, do not receive such favorable terms when selling assets. Cash paid to shareholders upon liquidation is also taxable.

A limited liability company, or LLC, has significant tax advantages over a C corporation.

Corporations can fold either by dissolution or complete liquidation.

Dissolution is an “administrative” termination of the corporation and while it is a usual first step, it doesn’t necessarily mean the corporation is folding.




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