I am still researching this issue. I did not get any direct guidance but you need to connect the dots to make a determination-
Based on my preliminary research-
The taxable gain generally passes through to the shareholders. The stock basis is increased by the shareholders' share of this gain.This increase in stock basis should either decrease the gain recognized or increase the loss recognized on the liquidation by the shareholders depending on the stock basis.
section 331(a)(1), it is provided that amounts distributed in complete liquidation of a
corporation shall be treated as in full payment in exchange for the stock.
Also, Sec 1366 states that the shareholder's pro rata share of these items is taken into account on the shareholder's final return
here is a link to Sec 331amd others for your reference-
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.