Liquidation and Dissolution

Topics: Company, Stock, Corporation Pages: 3 (804 words) Published: March 10, 2012
Liquidation and Dissolution
B. Green
Professor Slabiak
Advance Federal Taxation

Discussing the differences between a corporation that is liquidated and one that is dissolved, we will define the terms and what causes the two. Between the two there is a difference, but there is a main difference in the tax world. For tax purposes, Corporations assets and the liabilities is monitor. Corporations can appeal the actions or issues they made have to face by going through the process, but for the most part this should be your last result.

Corporations are business associations that are publicly registered; they follow the corporation rules and have the same legal rights as of one individual. It exists of managers, employees, creditors and shareholders. When the corporations fail, everyone and everything will fail also. That is why the price to succeed and bring on investors and so important for all companies.

A Liquidation of a company is when the assets of the company is taken over or sold. Going through liquidation do not necessary means the company is over. It just means that they will need help and low on their finances, some companies bounce back and most won’t. Liquidation can be either voluntary or involuntary. The involuntary process deals with the creditors or other officials to gain access to the company’s assets because of non payments or violation of a law.

Oppose to involuntary liquidation with the force of bankruptcy, voluntary liquidation is not so harsh, but it is not so different. Voluntary liquidation can occur when the company calls for liquidation with shareholders approval or if the creditors calls for one for in need of assistance or outside help. Voluntary liquidation gives open options on how or when the companies can pay their debt, it do not necessary means the company cannot pay it just means they cannot pay at that moment. So they are not in bad terms, as of yet in this level of the liquidation process.

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