"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.
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.
Hi @DavidS127 so would the corporation's cash funds count as "assets" in this case?
Yes, cash is an asset of the corporation, but distributing that cash to shareholders isn't a disposal.
Related question for @DavidS127 : I have a C-Corp owned by my self directed IRA. If I transfer an asset (share in Limited Partnership) from the C-Corp to the parent IRA, and it is worth more than 65% of the total value of the C-Corp, what are the tax implications I need to worry about? If I say Yes to #17 in Form 1120, what are the ramifications?
Is a transfer of the LP share to the parent (100%) stock holder, considered disposing of the asset?
Please note the entity getting the asset is a tax-deferred entity (IRA).
Thank you.