McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

تمرين 30

Bevo Corporation experienced a complete loss of its mill as the result of a fire.The company received $2 million from the insurance company.Rather than rebuild, Bevo decided to distribute the $2 million to its two shareholders.No stock was exchanged in return.Under what conditions will the distribution meet the requirements to be a partial liquidation and not a dividend? Why does it matter to the shareholders?