How to Report IRS Form 1099-DIV: Liquidating Distributions from a Corporation
Form 1099-DIV is filed to report dividends and other distributions. Most taxpayers receive a Form 1099-DIV with amounts reported in boxes 1a and 1b for ordinary & qualified dividends, respectively.
If you receive a Form 1099-DIV that reports liquidating dividend distributions, your tax reporting requirements are a bit more complicated.
Liquidating distributions are treated as a sale or redemption in exchange for all of your stock in the corporation. This information is generally reported on Form 8949 & Schedule D. You report your liquidation of the stock using the gross sales proceeds on Form 1099-DIV and then your adjusted cost basis in the stock. The net result is either a short-term or long-term capital gain or loss, depending upon your holding period.
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