Liquidating distribution investment partnership

A business trust is either treated as a corporation or partnership for federal income tax purposes.

The role of the trustee of the liquidating trust is to administer and manage the liquidating trust, sell assets, pay creditors, resolve any claims and distribute any available funds to the beneficiaries of the trust.

The fair value of the contribution to the liquidating trust would represent the new owner's basis in the liquidating trust.

Similarly, in the case of a liquidating distribution from a partnership, the business assets are deemed to have been distributed to the partners and transferred to the liquidating trust.

Also, if the time period is unreasonably prolonged, the status of the entity may change from a liquidating trust.

If a trust is created outside of Chapter 11 of the Bankruptcy Code, a private letter ruling may be requested if conditions of Revenue Procedure 82-58 are met.

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Download PDF When "Liquidating Trust" is mentioned, most people associate this with bankruptcy.

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