kill, murder, remove, destroy, do in (slang), silence, eliminate, take out (slang), get rid of, wipe out (informal), dispatch, finish off, do away with, blow away (slang, chiefly U.S.), annihilate, exterminate, bump off (slang), rub out (U. slang) sales and/or distributions, the dividend received deduction is still available to PHCs (albeit in reduced form), the PHC tax has been reduced dramatically and is still only imposed if there is "undistributed PHC income.
Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.A partnership’s income, losses, deductions, and credit are passed through to the partners for Federal tax purposes and taxed directly to them, regardless of when income is distributed. Since the partners have already paid tax on the income when it is earned, a complex system of rules applies to prevent double taxation when the income is later distributed to the partners.These rules (a) allocate the partnership’s income, losses, deductions, and credit among the partners and (b) adjust basis to reflect each partner’s allocation of those items.As stated in Taxation of Limited Liability Companies and Partnerships, limited liability companies are taxed as partnerships by default.AS early as 1947, our Supreme Court had already characterized the gain or loss sustained by a stockholder of a corporation as a taxable income or a deductible loss.
The same was reiterated in 2008 where the SC emphasized that any gain on the part of the stockholder is subject to income tax.
In invoking this provision, one can assume that the BIR is looking from the viewpoint of the stockholder whereby it has all the characteristic of an outright sale.
At the CTA division level, however, the Court clarified that mere distribution of liquidating dividend on account of the dissolution of a corporation is not to be treated as sale for purposes of the imposition of capital gains tax.
One of the reasons is that the conveyance of real property as a result of a valid dissolution is without any consideration.
In sum, the CTA decision followed the justification of the 2008 SC decision.
In view of the various justifications to exempt the liquidating dividends from tax on the part of the liquidating corporation, the CTA En Banc made a clear stand that the basis for liquidating dividends as not subject to tax is not because of the absence of income from or the absence of sale, disposition or conveyance of real property.