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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3345
Experience:  15+ years tax preparation and tax advice.
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Does CASH LIQUIDATION DISTRIBUTION in BOX 8 of 1099-DIV have

Customer Question

Does CASH LIQUIDATION DISTRIBUTION in BOX 8 of 1099-DIV have to be reported.
This is the first time I have received a 1099-DIV with an entry in BOX 8.The only info I
have is the amount.I understend that this is a partial return of capital, only reducing the
cash basis of the sock,and could be there for informational purposes only.How shall I treat
it ?
Vern
Submitted: 4 years ago.
Category: Tax
Expert:  Wendy Reed replied 4 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.

 

Hello there, Publication 550 describes the tax treatment of this type of distribution. How you treat it depends upon whether this is a total payment or liquidation, or if it is part of an installment.

 

Basically, the distribution is not taxable up to the recovery of your basis in the stock. Once your basis is recovered, the remaining portion is taxable as capital gain. If you receive a total distribution that is less than your basis, you will have a capital loss. If you bought more than one block of stock, you will need to figure it out based on the instructions provided.

 

If there is no capital gain or loss(distribution and basis the same), you do not need to report it but you may choose to, by listing it on Schedule D with no gain or loss.

 

Please see page 22 in the following publication under "liquidating distributions":

http://www.irs.gov/pub/irs-pdf/p550.pdf

Customer: replied 4 years ago.

The distribution is from several companies, but I can't find the names.I am dealing with

a financial advisor representing a large investment company,and it is very hard to get

any info from them. On schedule D : DISCRIPTION OF PROPERTY - Various

DATES AQUIRED,SOLD I could leave blank.SALES PRICE and COST OR OTHER

BASIS , both entries could have the amount of the distribution. Please let me know if that looks O.K.

Expert:  Wendy Reed replied 4 years ago.
I would not leave the dates blank. I would determine first if it is long or short term holding period. You could put "various" under date purchased, and use the liquidation date as the sold date. The fund company should be able to tell you that. And if you are sure that this is a total return of capital, then put the same amount as basis and proceeds as what is listed in box 8 of your 1099DIV.
Customer: replied 4 years ago.

This is only a partial return of capital reducing the cost basis,but the companies are not

liquidating, and may be I coul enter "Various" fot the DATE SOLD also. Actually no stock is being sold. Could that be O.K.

 

Expert:  Wendy Reed replied 4 years ago.

I would proceed as described in the publication under "stock acquired at different times".

If you are sure that it is all return of capital, then proceed as you have mentioned, but I would not use "various" for date sold. I would use the date that the liquidation was done. You should have this somewhere on a statement or a check if you received cash.

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3345
Experience: 15+ years tax preparation and tax advice.
Wendy Reed and 4 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

The Feedback System did not work. A message popped up: There is no more feedback

that You can give at this time.

Sory,

Customer/p>
Expert:  Wendy Reed replied 4 years ago.
It went through, Thank you!

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