A liquidating dividend is

Posted by / 05-Aug-2016 13:16

A liquidating dividend is

Tothe extent that a distribution by a corporation is not covered by currentor post-1913 earnings and profits, however, it is treated by§ 301(c)(2) as a return of capital to the shareholder, to be appliedagainst and in reduction of the adjusted basis of his stock.If thedistribution exceeds the adjusted basis of the stock, the excess isordinarily taxed as capital gain, with an exception of minor importancefor distributions out of increase in the value of corporate propertyaccrued before March 1, 1913.On the 1099-DIV, there's a separate box.' data-inline-edit-type='wysiwyg' data-inline-edit-url='/answers/570513' id='inline_edit_answer_570513_body' People come to Accountants Community for help and answers—we want to let them know that we're here to listen and share our knowledge.Signal To convey information through a firm's actions.The double taxation feature inherent in C corporations plays a special role in liquidation.

While corporations most often issue 1099-DIVs to report stock dividend distributions, it can also be used to report nondividend distributions, including money a corporation returns to an investor during the liquidation process.

This mainly occurs during voluntary liquidations of solvent corporations.

I believe that on the 1120, it's reported just like a non-liquidating distribution - as an M-2 adjustment in Screen 40.

If the governing state allows dissolved corporations to retain assets, the corporation can continue to exist.

Liquidation marks the point when a corporation has committed to closing its doors.

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