Submitted By: someone
Answered: June 6, 2021 11:59 pm

I received a cash liquidating distribution. Is this taxable?

A cash liquidating distribution are funds distributed to a shareholder when a corporation is partially or fully liquidated. The distribution represents a return of an investor’s capital, so it’s not taxable to the extent of basis in the stock. If the distribution exceeds basis, it is a capital gain (long-term or short-term depending upon how long the stock has been held).

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Tax Glossary

Accrual method of accounting

A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred.

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