From a tax perspective, which entity choice is preferred when a liquidating distribution occurs and the entity has appreciated assets?
A)Partnership
B)S corporation
C)C corporation
D)Both S corporation and C corporation

Question

Quizplus · Accepted Answer

Partnerships are generally preferred for liquidating distributions involving appreciated assets because they can distribute these assets to their partners without triggering a tax event, unlike C corporations, which may face double taxation (corporate level and then at the shareholder level upon distribution), and S corporations, which have certain restrictions and potential tax implications on distributions.

From a Tax Perspective, Which Entity Choice Is Preferred When