Capital gain on liquidation: shareholders taxed on received assets' market value; company taxed only if liquidator sells assets. Capital gain on liquidation: the company incurs no capital gain when assets are distributed without sale, but is taxable if the liquidator sells assets and distributes proceeds. Shareholders' capital gain equals money received and/or market value of distributed assets on distribution date minus any deemed dividend, from which cost of acquisition/indexed cost and sale-related expenditure are deducted; period of holding excludes time after liquidation and losses may arise if receipts are below cost. Non-resident shareholders are governed by the same distributive treatment subject to domestic source rules.