stoney creek inn speed dating - Cash basis liquidating distributions

The amount that a shareholder receives in a liquidating distribution is treated as full payment in exchange for the shareholder’s S corporation stock.

In other words, if the S corporation is making a liquidating distribution, the shareholder is treated as having sold her stock for the amount of the distribution.

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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 redeemed in the partial liquidation.

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock.

After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain.

The shareholder will recognize gain or loss equal to the difference between the amount of the distribution and the shareholder’s basis in the S corporation stock.

Note that these rules differ from the ordinary rules applicable to distributions from S corporations.

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation.

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.

Distributions to the shareholder are not included in the shareholder’s gross income to the extent that the distribution does not exceed the shareholder’s basis in the stock.

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