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ineedtaxhelp2020
Level 2

Disposal of assets (C-corp, Form 1120 Schedule K line 17)

"During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by value) of its assets in a taxable, non-taxable, or tax deferred transaction?"

 

I am wondering what constitutes the "disposal" as mentioned above by the IRS. If my C-corporation has performed a liquidation/nondividend distribution to return back all investor capital and profits would this qualify as a "disposal of assets"?

 

Or does "assets" only mean stock/shares? Currently my C-corp has $0 in remaining cash/assets. 

https://www.irs.gov/pub/irs-pdf/f1120.pdf

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Accepted Solutions
DavidS127
Expert Alumni

Disposal of assets (C-corp, Form 1120 Schedule K line 17)

Yes, cash is an asset of the corporation, but distributing that cash to shareholders isn't a disposal.

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3 Replies
DavidS127
Expert Alumni

Disposal of assets (C-corp, Form 1120 Schedule K line 17)

Assets in this context are things the corporation owned, typically investments, land, buildings, land improvements, buildings, equipment, etc.  Your stock in the C corp is not an asset of the corporation.

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ineedtaxhelp2020
Level 2

Disposal of assets (C-corp, Form 1120 Schedule K line 17)

Hi @DavidS127 so would the corporation's cash funds count as "assets" in this case?

DavidS127
Expert Alumni

Disposal of assets (C-corp, Form 1120 Schedule K line 17)

Yes, cash is an asset of the corporation, but distributing that cash to shareholders isn't a disposal.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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