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Dissolving an S-Corp?
I have an 1120S client that is dissolving the S-Corp. All that is left on S-Corp’s balance sheet is Cash in the bank, common stock and retained earnings. It is a husband wife ownership 50% each. If I distribute the cash from the bank account to the two owners, which have enough basis in there capital accounts to cover the distribution, would this be tax free? Or, should the distributions be treated as Capital long-term gains?
