From a tax perspective, which entity choice is preferred when a liquidating distribution occurs and the entity has assets that have declined in value?
A)General partnership.
B)S corporation.
C)Limited partnership
D)All of the above receive the same tax treatment on liquidating distributions.

Question

Quizplus · Accepted Answer

An S corporation is preferred because it allows shareholders to recognize a loss on the liquidating distribution if the fair market value of the distributed property is less than its adjusted basis. This can provide a tax benefit by offsetting other income.

From a Tax Perspective, Which Entity Choice Is Preferred When