Liquidating distribution return of capital

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If the s\h has the cash, have him repay the loan to the corp and then distribute the cash to him.Creditors are always senior to shareholders in receiving the corporation's assets upon winding up.However, in case all debts to creditors have been fully satisfied, there is a surplus left to divide among equity-holders.In general, companies that are doing well pay out healthy and growing dividends. Companies with declining earnings may be forced to buy back stock or pay dividends with borrowed funds.Another alternative is to distribute dividends in kind.For the most part, such a distribution is made from the company's capital base, and as a return of capital, is typically not taxable for shareholders.

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