Once a business has produced sufficient earnings or when due to market reasons it becomes necessary to redefine business goals, an approach to withdraw any resources contributed by investors and any benefits obtained at that moment should be found, trying to damage as little as possible such resources with unnecessary tax payments and other administrative and financial costs.

Partial or total closing of production lines also represents the need to sell any integrating assets, including those facilities and inventories that cannot be used in other production lines.  For this purpose, it is necessary to additionally consider the future of the resources to be received in order to avoid that any given Partnership receives funds that could not be withdrawn without previously paying any administrative, financial and tax costs.

In addition, when the future of such resources is an investment by stockholders or owners, then it is also necessary to identify what is the most convenient way out for the Company in order to prevent any damage to the equity expected to be obtained. For example, a stockholder may validly decide to sell any property owned by the Company or sell the stocks representing total ownership of the Company; this decision basically depends on the history and operating background of the Company itself, and the criteria adopted during collection of the basic tax information.

It is necessary to also consider that in cases where a Partnership is involved in an operation simplification process or closing, there a benefits provided by the tax provisions which enable it to make any partial or total operation closing less difficult.  Such is the case of accounts designated as After-Tax Retained Earnings Account (“CUFIN” from its initials in Spanish) and Capital Contributions Account (“CUCAA” from its initials in Spanish) which represent any benefits that stockholders have the right to receive and for which no income tax is to be paid or has already been paid by the Partnership.

In this regard, our services enable our clients to identify the most convenient method to make resources flow through the involved entities, trying to avoid incurring in any additional costs that may damage any businessman’s equity.  Moreover, they include advisory on submission of all notices and compliance with all of the requirements stipulated by Law in order to close operations in the most convenient and transparent possible manner.