Formal written plan is not required, but is preferred. Informal plans are okay, but documentation is recommended. Gain or loss is computed on each block of stock. Additional receipts past zero are recognized gain. Principal payments are considered payments for the stock retired.
Interest is treated as interest income.
Does not apply to inventory unless bulk sale occurs. Corporate sale must take place within the 12-month period starting with the adoption of a plan of liquidation. Liquidation must be completed within 12-month period. Shareholders treat distributed property as if they purchased it from corp. FMV of property received is assumed to be no less than the amount of the liability assumed with the assets.