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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I received a 1099-DIV for a cash liquidation distribution (box

Resolved Question:

I received a 1099-DIV for a cash liquidation distribution (box 8) for which I have gains against the original stock purchase price. I believe that I enter this on Schedule D as a long term gain. Is that correct?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Yes - that is correct - if that a final distribution - be sure to report the basis of the stock.

 

Liquidating distributions (so-called liquidating dividends) may be result of partial or complete liquidation of a corporation. They are classified as a return of capital.

Partial liquidating distributions are not taxable income till the extend of your cost basis in your original investment - and will reduce that basis. Only if the distribution exceeds the cost basis - you recognize a capital gain.

 

If the corporation has been completely liquidated - the distributions should be reported on the schedule D - you may have either a capital gain or a capital loss.

 

Let me know if you need help with reporting.

 

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