3️⃣ Bank Secrecy Act (BSA) & USA PATRIOT Act

Regulates identity verification of beneficiaries receiving money through financial institutions or escrow agents.

• KYC (Know Your Customer)

• AML (Anti-Money Laundering)

• OFAC screening (must not be on U.S. sanctions list)

✅ Required for all fund recipients:

• Government-issued photo ID

• Proof of address

• Source-of-funds or entitlement verification

Internal Revenue Code (IRC) – Taxation of Beneficiaries

Determines how proceeds are taxed when paid out to beneficiaries.

• IRC Section 331 – Shareholder liquidating distributions

• IRC Section 6043 – IRS notification of corporate liquidation

• Form 1099-DIV or 1099-B – Issued to beneficiaries for tax reporting

✅ If the beneficiary is a shareholder:

• Payment is usually treated as a capital gain, not ordinary income

• Tax documentation must be provided at year-end

3️⃣ Bank Secrecy Act (BSA) & USA PATRIOT Act

Regulates identity verification of beneficiaries receiving money through financial institutions or escrow agents.

• KYC (Know Your Customer)

• AML (Anti-Money Laundering)

• OFAC screening (must not be on U.S. sanctions list)

✅ Required for all fund recipients:

• Government-issued photo ID

• Proof of address

• Source-of-funds or entitlement verification

In What Order Are Parties Compensated During a Corporate Liquidation?

When a company undergoes voluntary or involuntary liquidation, the order in which parties are compensated is governed by corporate law and insolvency regulations. The purpose of this structure is to ensure a fair and legally compliant distribution of the company’s remaining assets.

This priority list applies to most U.S. jurisdictions and aligns with both state corporate laws (e.g., Delaware General Corporation Law) and federal bankruptcy principles (under Title 11 of the U.S. Code).