Mississippi Administrative Code
Title 35 - Department of Revenue
Part 3 - Income and Franchise
Subpart 08 - Corporations
Chapter 01 - Liquidations and Distributions
Section 35-3-08-01-100 - Effects on Corporation
Current through September 24, 2024
1. Distributions of the property of a corporation, including partial and complete liquidations, shall be recognized by the distributing corporation and the gain or loss shall be computed on the difference of the fair market value of the assets distributed and their basis. The above would be applicable to a subsidiary liquidating into a parent unless the parent assumes the same basis that was on the books of the subsidiary. If the parent assumes a basis different from that on its subsidiary's books, then the gain would be recognized on the excess amount placed on the parent's books over the amount recorded on the subsidiary's books. A corporation shall also recognize any gain on the sale of its assets in a partial or complete liquidation, the gain recognized being the difference in the cash and fair market value of property received less the basis of the property given up.
2. A gain or loss will be recognized in the year of the sale of the assets, or if a distribution of assets, in the year of the distribution. A corporation that distributes property over two taxable years must report the gain or loss in each year the distribution is made. The distributing corporation may not elect an installment basis for reporting the sale of its assets.
3. A tax credit is allowed to the shareholders for the tax paid by the corporation on the distribution. This credit to each shareholder is determined by the ratio of the percentage of shares owned by the shareholder to the total number of shares relinquished for the property, applied against the tax paid on the distribution gain by the distributing corporation.
4. The corporation shall provide the State Tax Commission a list of all shareholders with their percentage of ownership, distribution, tax credit allowed, and identification number on Form 62-465. The corporation shall also provide to the shareholder their percentage of ownership, distribution, tax credit allowed, and identification number.
