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Corporations can fold either by dissolution or complete liquidation.
Dissolution is an “administrative” termination of the corporation and while it is a usual first step, it doesn’t necessarily mean the corporation is folding.
Corporations are the most widely known business forms, providing limited liability to shareholders and allowing ownership to be freely transferred through the buying and selling of stock.
C corporations are also subject to what is known as "double taxation." This type of tax treatment means that income and gains on property are taxed first at the corporate level and then again at the individual shareholder level for any dividends received.
The amount reported on a 1099-DIV represents the return of a shareholder’s investment.
Under the Internal Revenue Code of 1954, the corporation is aseparate taxable entity, so that corporate income is taxed to thecorporation and dividends paid by the corporation are taxable to theshareholders.
The framework for the taxation of corporate distributionsis provided by Sections 301 (a), 301 (c), and 316 of the Code.
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