A: The initial liquidating distribution, along with the operating distributions received in 2016, will be reported to shareholders on their 2016 Form 1099-DIV, which we expect to be mailed on or before January 31, 2017.
Q: What are the tax implications for Box 8, Cash Liquidation Distributions for Taxable Accounts (such as individual or joint tenant type accounts)?
A: No, in addition to the initial liquidating distribution, we expect to make one or more additional liquidating distributions in First Quarter 2017.
Q: How will the initial liquidating distribution be reported for tax purposes?
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.
Creditors are always senior to shareholders in receiving the corporation's assets upon winding up.
However, in case all debts to creditors have been fully satisfied, there is a surplus left to divide among equity-holders.
If you acquired stock in the same corporation in more than one transaction, you own more than one block of stock in the corporation. You can report a capital loss only after you have received the final distribution in liquidation that results in the redemption or cancellation of the stock.
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. Whether you report the loss as a long-term or short-term capital loss depends on how long you held the stock.
A: As long as the cash remains within the Qualified Account and is not distributed out of the Qualified account, receipt of Cash Liquidation Distributions by such an account generally will not have any immediate tax implications.