topic Disposal of assets (C-corp, Form 1120 Schedule K line 17) in Business & farm

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

ineedtaxhelp2020 — Fri, 26 Jun 2020 19:44:59 GMT

"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

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

DavidS127 — Fri, 26 Jun 2020 20:24:56 GMT

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.

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

ineedtaxhelp2020 — Fri, 26 Jun 2020 20:34:44 GMT

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

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

DavidS127 — Fri, 26 Jun 2020 21:02:04 GMT

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

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

foaiman — Fri, 21 May 2021 23:42:59 GMT

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.

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

max52 — Thu, 11 Aug 2022 21:19:24 GMT

If in the middle of the year on dioposes of more than 65% of its assets what are the implications?