Gains and losses are recognized by the liquidating corporation on distributions to a minority shareholder in a § 332 liquidation.

Question

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In a § 332 liquidation, gains and losses are generally not recognized by the liquidating corporation on distributions to a 100% (or controlling) shareholder, not to a minority shareholder. The specific non-recognition rule applies to liquidations where the parent corporation owns at least 80% of the stock.

Gains and Losses Are Recognized by the Liquidating Corporation on Distributions