 Hello, and welcome to this session. This is Professor Farhad. In this session, we're gonna be looking at complete corporate liquidation. We're gonna look at it from the shareholders' perspective. This topic is covered in the corporate income tax course, the CPA exam regulation section. As always, I would like to remind my viewers, which is you to connect with me on LinkedIn. You wanna make sure you subscribe to my YouTube. On YouTube, I have 1,500 plus accounting, tax, and all the thing lectures. If you like my lectures, please like them, share them, put them in the playlist. If you're benefiting from them, it means somebody else might benefit as well. This is my Instagram account. This is my Facebook, and this is my website. On my website, you can donate if you'd like to, to support the channel. Also, you can get in touch with me. Let's talk about liquidation from a shareholders' perspective. We looked at the liquidation from the corporate perspective. Now it's the shareholders' perspective. From the shareholders' perspective, it is easy. It's a straightforward and easy. Let's see how it works. Gain or loss recognize on the receipt of property from liquidating corporations. Simply put, you're gonna have to recognize the gain or the loss. And how do you compute this? Pretty straightforward, something that we are familiar with. Fair market value of property received minus the basis. Now, if you receive property and there's a liability, that property, then you have to reduce it by the liability. Generally, gains or losses are recognized. So basis in the asset received is the fair market value of the date of the distribution. So what's the fair market value of the date? That's the basis in the asset received. So this is the fair market value for you, okay? So going forward, that's gonna be your basis, okay? The fair market value, whatever you said your fair market value is. Now, special rules are for installment obligation. Those are if you are making payments, but we don't have to worry about this. So shareholder may defer gain recognition to point of collection. Basically, what you're looking here is the installment method, which is what I'm not gonna cover. I do cover it in my intermediate accounting if you're interested in that. Okay, now from a corporation's perspective, we already looked at the corporation. They must recognize all gains. If there's any gain, if there's any losses, see that this allowed losses. See the related party discussion and see the built in loss limitation as well as the parent subsidiary. So for the losses, we looked at those and for a corporation, we looked at those in a separate recording. Okay, let's take a look at this example to illustrate the concept. Green corporation assets are valued at 9.20 after payment of all corporate debt except $134 of taxes payable on the net gain it recognized on the liquidation. So there's still some debt that's related to the liquidation. Bruno individual and the sole shareholder of green has a basis of 280, compute the gain or loss recognized by Bruno on the liquidation. Now, what is the amount realized? Well, Bruno is gonna receive the value of the property, but Bruno is responsible for paying 134,000 on the liquidation because the corporation's still responsible for that. Therefore, 786,000 is the net proceeds that Bruno would receive. Now, we're gonna take the net proceeds, then deduct the basis. The basis and his stock is 280,000. And as a result, Bruno would recognize again of 506,000. So this is the answer. So basically, as I said, on the shareholders perspective, it's pretty straightforward. If you have any questions about this topic, please email me. If you happen to visit my website, please consider donating. And if you're studying for your CPA exam, as always, study hard, it's worth it. And see you on the other side of success.