The National Directory of Certified Public Accountants

Ask A CPA - Dividends

How Are Liquidating Dividends Reported And Taxed?

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. They may be paid in one or more installments. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9 When a liquidating dividend occurs, it is considered to be a return of capital and not profit. If the distribution is more than your basis, you would have to report the difference as a capital gain. If the distribution is less than your basis, you may be able to claim a capital loss.

If you need professional help with "Dividends" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.