Liquidating distribution taxability

If you need to report what in effect is a "sale" of a security because of liquidating distributions then use the "Stocks. If you've already entered stock trades tell Turbo Tax that you need to "Add Another Account". Tell Turbo Tax that the Financial Institution involved was "No Financial Institution."Sales entered on the resulting input form will be placed on a Form 8949 with either a "C", (short term holding), or "F", (long term holding), and this indicates to the IRS that NO 1099-B was issued for this sale.

Of course the Date of Acquisition has to come from your own records. But I did enter "No Financial Institution" and the Investment Sales, Summary of All Accounts shows the new line "No Fin Inst" below the entry from my brokerage. Would be happy to send a screen shot or more info if you have a way to feed back to TT.

As a return of capital, this distribution is typically not taxable for shareholders.

A liquidating dividend is distinguished from regular dividends that are issued from the company's operating profits or retained earnings.

Of course you don't have a 1099-B to report the sale and Turbo Tax isn't particularly clear about what to do here despite the statement it makes when it notices a liquidating distribution on a 1099-DIV: -------------------------------------------------------We'll help you work on your cash liquidation distribution of [$ amount] from [company name] a bit later.

The payment date is when the company officially mails the dividend checks or credits them to investor accounts.

In general, with regular dividends, on and after the ex-dividend date, a seller is still entitled to the payout even if she/he has already sold it to a buyer.

Essentially, a person who owns the security on the ex-dividend date will receive the distribution, regardless of who currently holds the stock.

As company operations end, remaining assets go to existing creditors and shareholders.

Each of these parties has a priority in the order of claims to company assets.

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