Final answer:
The liquidation distributions must occur within one tax year of the parent corporation following the initial distribution in complete liquidation. This is crucial for tax purposes under the U.S. tax laws.
Step-by-step explanation:
When a subsidiary corporation is liquidated into its parent corporation under a formal plan of liquidation, the distributions must take place within one tax year of the parent corporation after the date on which the first distribution in complete liquidation is received. This time frame is necessary for the liquidation to qualify for certain tax benefits under the U.S Internal Revenue Code, such as non-recognition of gain or loss on the transfer of assets from the subsidiary to the parent. If the distribution occurs over a period longer than this, it may not qualify for these benefits. It is important for corporations involved in such transactions to ensure compliance with tax regulations to avoid unintended tax consequences.