Liquidating assets bankruptcy
It may take several years for such assets to be converted into cash.
A partner does not recognize loss on a partnership distribution unless (1) the adjusted basis of the partner's interest in the partnership exceeds the distribution, (2) the partner's entire interest in the partnership is liquidated and (3) the distribution is in money, unrealized receivables or inventory items.
Over the last decade, a number of firms have been established to provide trustee services in addition to trust departments of banks.
A liquidating trust is generally considered a grantor trust for tax purposes.
Upon the deemed contribution of the assets to the liquidating trust, the trust will have the same adjusted bases in its assets as the partners had in those assets immediately prior to the transfer to the trust.
Conclusion As noted, the use of a liquidating trust may be a cost efficient method to liquidate certain assets.