Since repeal of the "General Utilities" doctrine in 1986, and expiration of the two-year rule for closely held corporations permitting prior law treatment for liquidating distributions completed before January 1, 1989, corporate liquidations have been subject to painful income tax consequences. For those wishing to separate warring factions but to continue the corporate form, a divisive “type D” corporate reorganization may be a superior alternative to a corporate liquidation.

The income tax consequences of corporate dissolution and liquidation differ depending upon the type of corporation involved.