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.
An expanded version of the same can also be found in Section 8 of Revenue Regulations 6-2008 whereby it is clarified that the capital gain or loss derived by stockholders in receiving liquidating dividends are subject to regular income-tax rates.
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.
The Appellants had only to determine whether or not such a disassociation would occur by the payment of a liquidating dividend by BCo or the sale by the Appellants of their respective shareholdings in BCo.
The Appellants attempted to realize the economic value of BCo's surplus by means of a transaction characterized as a sale of shares giving rise to a capital gain, rather than a distribution of a taxable liquidating dividend. The general scheme of the Income Tax Act requires that distributions to shareholders of corporate property be treated as income.
Only 21% of the target's assets were acquired with the acquiring corporation's stock; the remaining 79% were acquired as a liquidating dividend
of the previously held stock in the target.
The developer of the iconic leisure and tourist destinations like City of Dreams Manila and Tagaytay Highland paid the tax in protest arising from the transfer of Belle Bay City Corporation (BBCC) of its remaining assets to its sister company consisting of parcel of reclaimed lands in Paranaque City by way of liquidating dividends
[section]738.401(2), assuming none of the dividends are redemption or liquidating dividends.
(8) Assumes that the dividends in Example 4b are not redemption or liquidating dividends. See Fla.
On their 1989 returns, MSSTA reported a $300,000 sale of its assets and T reported no liquidating dividends
* Income from receiverships (liquidating dividends
and payments on claims) to the extent such funds are not required by REFCO or the Financing Corporation (FICO).