An advance refers to a payment on account or a loan. It is particularly relevant in a partnership context, referring to amounts paid into the partnership that exceed agreed capital contributions. Under the Partnership Act 1890, such advances collect interest unless otherwise agreed by the partners. On dissolution, advances are repaid after external creditors but before the distribution of remaining capital to the partners.
A corporation that dissolves before realizing a substantial portion of the taxable income to be derived from its properties. The Internal Revenue Service (IRS) treats the gain on the sale or liquidation of a collapsible corporation as ordinary income to the stockholder.
Dissolution marks the formal conclusion of a business entity, such as the cessation of a partnership or the liquidation of a company, executed through various legal mechanisms to terminate business operations.
Winding-up is the process of dissolving a company by liquidating its assets to pay off creditors and distributing any remaining assets to shareholders.
