As a general rule, a liquidating corporation recognizes gains and losses on the distribution of property in complete liquidation.

Question

Quizplus · Accepted Answer

When a corporation is in the process of liquidating, it is recognized as a separate taxable entity until the completion of the liquidation process. During this process, the corporation must recognize any gains or losses on the distribution of property to its shareholders, which will be taxed accordingly. Therefore, the statement is true.

As a General Rule, a Liquidating Corporation Recognizes Gains and Losses