A distribution in partial liquidation of a corporation is always treated as a sale by an individual shareholder.

Question

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When a corporation distributes assets in partial liquidation, it is treated as a sale by the individual shareholder under the tax law. This is because the distribution reduces the shareholder's interest in the corporation and can result in a gain or loss to the shareholder based on the fair market value of the distributed assets received.

A Distribution in Partial Liquidation of a Corporation Is Always