Questions & Answers

What are cash and noncash liquidation distributions?

Liquidating distributions are distributions you receive during a partial or complete liquidation of a corporation.

If your 1099-DIV only has an amount in Box 9 or Box 10, you do not enter the information on the 1099-DIV screen. If it was a partial liquidation, there is nothing to report on your tax return. You adjust the cost basis of your stock or mutual fund by the amount of the partial liquidation shown in Box 9 or Box 10, then when you eventually sell the stock you will use the lowered cost basis as the purchase price of the stock.

If the liquidating distribution shown in Box 9 or 10 is a complete liquidation, then report the amount in Box 9 or 10 on the stock sale screen as a stock sale.

For example, if your cost basis in stock in a company is $1,000 and the company is totally liquidated, then if you receive a 1099-DIV with Box 9 showing $400 and you received nothing else from the liquidation, then you would report the stock as a sale on the stock sale screen and report $400 as the sales price and $1,000 as the cost basis in the stock that was completely liquidated.

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