A distribution in partial liquidation is not considered equivalent to a dividend if it is attributable to a genuine contraction of the corporation's business.

Question

Quizplus · Accepted Answer

A distribution in partial liquidation is considered a return of capital and not a dividend, and is not subject to the same taxation rules. However, if the distribution is due to a genuine contraction of the corporation's business, it is still considered a return of capital and not a dividend.

A Distribution in Partial Liquidation Is Not Considered Equivalent to a Dividend