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JBE, CPA
JBE, CPA, Certified Public Accountant (CPA)
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Capital Gains/Losses

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Hi, I own a company that is currently being liquidated. I receive a distribution each quarter, which is determined by several factors, including the number of shares I own. The distribution comes from the sale of assets.

My broker reported this amount on the 1099-B as proceeds from a stock sale. How in the world do I report this on Schedule D since I have not sold any shares?

Thanks!
Tom
Since the company is liquidating, the distributions from the sale of assets are similar to a sale. The distributions you receive, up to your basis in the stock, are a Non-Taxable Return of Capital. Anything over that amount is a Capital Gain.

If, by some chance, the company is still paying you dividends, then they are treated separately.
Paul Taliefero, Enrolled Agent
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Experience: 19 years of experience in income taxes
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A portion of your basis is to be allocated to each distribution. Obviously, this is easier said than done because you likely dont know the total amount of liquidating dividends to be received.

One approach is to make an estimate of the likely value of your stock and prorate the basis using the estmated dividends as the denominator and the basis as the numerator of the equation. Keep track of all of your distributions and adjust for any differences when the final distributoin is received.

When all else fails, guess!

JBE, CPA
JBE, CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 137
Experience: 25 Years Experience
JBE, CPA and 3 other Tax Specialists are ready to help you
Customer: replied 12 years ago.
Great, thanks for the info. How would this get reported on Schedule D? Would it go something like:

Stock: ABC
Proceeds: $1,000
Cost or Basis: $1,000

Leaving a net gain/loss of "0" - until (hopefully) the distributions exceed the cost.

Would I need to explain that it's an asset distribution? (actually, there's not much room on Sched D for explanation anyway).

Does that sound right?
To get a clearer idea of how to report it, could you tell me what numbers are in which boxes on the 1099-B?
That would probably work because a lot of this will be guess work until the final distribution.

JBE, CPA
Customer: replied 12 years ago.
DFTR -

This is what the broker's 1099-B looks like...

2003 FORM 1099-B:PROCEEDS FROM BROKER & BARTER EXCH. TRANS.    (OMB NO.1545-0715)


(1A)DATE OF SALE     (5)DESCRIPTION     (1B)CUSIP     &nb sp;(2) STOCK,BONDS,ETC.
                                                
There were several distributions in the year so there are several (four) "sale" or distribution dates under "(1A)", followed by the stock name in "(5)", followed by the CUSIP "(1B)", and the proceeds from the sale or, in my case, distribution from liquidation in "(2)", which amounted to approx $50, $200, $300, and $175 for each of four separate distributions throughout 2003 for this particular stock.
Im not sure why you received 4 separate 1099s from the same company. Seems to me that they could have aggregated the distributions and simply given you one form 1099 for the total. But, you can either report them separately on Schedule D or aggregate the distributions and report the total.

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