Liquidating assets bankruptcy
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.
It may take several years for such assets to be converted into cash.
A partnership generally does not recognize gain or loss because of distributions it makes to partners.The basis of property received in complete liquidation of a partner's interest is the adjusted basis of the partner's interest in the partnership, reduced by any money distributed in the same transaction.Thus, the partner's basis in the property can never be greater than the partner's basis in the partnership.Such agreement provides for trustee duties, compensation of trustees, and governance as well as distributions and other administrative matters.The liquidating trust normally has a lower cost structure than the existing fund and is managed on an "as needed" basis by the trustee as opposed to a full-time basis for the fund.
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Also, if the time period is unreasonably prolonged, the status of the entity may change from a liquidating trust.