Capital gain from liquidating dividends bios mode 20160716 v 0 23 wait updating fw
If you acquired stock in the same corporation in more than one transaction, you own more than one block of stock in the corporation.If you receive distributions from the corporation in complete liquidation, you must divide the distribution among the blocks of stock you own in the following proportion: the number of shares in that block over the total number of shares you own.Divide distributions in partial liquidation among that part of the stock that is redeemed in the partial liquidation.After the basis of a block of stock is reduced to zero, you must report the part of any later distribution for that block as a capital gain.Dear Kathy: I had purchased Incentive Stock Options back in 2000. It was getting a cash distribution from another company for last few years; 2003 onwards.Every year it would get money, it would deduct 44% State and Federal taxes and give 56% to share holders per their share in the company. Ricky - Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation.The company would send me a 1099 tax form filled "only" with Col-8 for Cash distribution / Liquidation. These distributions are, at least in part, one form of a return of capital. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9, in your case they were cash in box 8.
The primary difference between C corporations and S corporations is that C corporations are taxed twice on earned income: : once at the corporate level when the income is earned, and again at the shareholder level when the income is distributed.
After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain.
Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock.
The rules governing distributions from C corporations differ from the rules that apply to distributions from S corporations.
If the total liquidating distributions you receive are less than the basis of your stock, you may have a capital loss.
You can report a capital loss only after you have received the final distribution in liquidation that results in the redemption or cancellation of the stock.