Problem: How is this helpful? When corporations distribute assets to shareholders without closing down, it's called a non-liquidating distribution. Two common types are dividends and stock repurchases, and each has different tax effects for the company and its shareholders. Dividends are payments made to shareholders out of the company's profits. For the corporation, these dividends aren't tax-deductible, but they're usually paid from profits that have already been taxed. Shareholders, like individual investors, might pay taxes on dividends, but often at a lower rate called the capital gains tax rate. However, some entities, like pension funds, may not have to pay taxes on dividends. Stock repurchases, on the other hand, don't immediately affect the company's taxes. The company might use its after-tax profits or borrow money to buy back its own shares. For shareholders, selling shares back to the company could mean paying capital gains taxes if the stock price has gone up since they bought the shares. But if the stock price hasn't risen, they might end up with a bigger piece of the company without any immediate tax consequences. They can choose when to pay taxes on their gains, giving them some control over their tax obligations.