Due to age, retirement or failure of the business, many businesses must liquidate their assets and cease doing business. What is the tax treatment to the business and the owners upon liquidation of the business when the business is a C corporation, an S corporation or a partnership? Examples are needed to clarify your answers.

Regarding C corps. As part of a plan of complete liquidation, a C corp. distributes $1,000 cash and land to its sole shareholder. The land has a basis to the C corp. of $8,000 and a fair market value of $10,000. The shareholders basis in the C corp. stock, before the distribution, is $9,000. What is the tax treatment to the C corp. and to the shareholder of the distribution?

Regarding S corps. An S corp. with $500 in AAA and $200 in AEP distributes (in liquidation) $1,500 cash to a shareholder who has a basis in her stock of $600. What is the tax treatment to the S corp. and to the shareholder of the liquidating distribution?

Regarding partnerships. The ABC partnership distributes (in liquidation) $500 cash, inventory (inside basis $400, FMV $1,000) and 2 parcels of land (parcel 1 has a FMV of $2,000, and an inside basis $1,000, parcel 2 also has a FMV of $2,000, and an inside basis $1,000) to partner A whose outside basis is $3,500. What is the tax treatment to the partnership and to the partner of the distribution?