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If this is the case, management may discontinue the operations and liquidate the business.

In reaching a decision to liquidate a business, management will need to consider whether the business (a) has come to the end of its useful life, (b) lost key employees, (c) lost market presence and (d) has any remaining subdivisions that are viable (stand-alone or those created via a transfer to another operating division).

Eventually, company officers learned of their plight and reincorporated the business in the same state.

At issue is whether the company’s status as a corporation had been terminated by the administrative dissolution. Something else to consider is that under Section 336(a) of the tax code, a gain or loss is recognized by a liquidating corporation on the distribution of its property in complete liquidation, as if such property were sold to the distributee at its fair market value. 142 ) states that “…where a corporation ceases business operations, has retained no assets, has no income, and has actually liquidated, there is in effect a de facto dissolution, even though the corporation has not been formally dissolved…” In addition, it is entirely possible for the corporation to continue in existence even though it has been, as a matter of state law, dissolved.

The company was “administratively dissolved” some time after, for example, effective January 25, 2008, due to its failure to timely pay state franchise taxes.

Company management, however, was blissfully unaware of this development and continued to file the business’s federal corporate income tax return and pay all federal income taxes.

"For example, if the wife keeps a house with 0,000 equity, this asset generally has a gain exclusion," he said.

If a company will only give you credit or a part of what you paid, then you may be better off trying to sell it yourself. If you have to liquidate quickly, you will likely need as much cash as possible quickly, so offer deep discounts if you can. Hire a liquidation company if you need help or are uncomfortable selling off your business.

Special needs trusts ease parent worries "Yet a judge could say you're even," Black noted.

Liquidating assets should be a last resort in most cases, because liquidation creates a taxable event.

Her work has appeared in "The New York Times," "Redbook," "Family Circle" and many other publications.

A fine line exists between definitions of a corporate liquidation and dissolution.