Box 8 on 1099-DIV


G

Guest

I received a 1099-DIV with an entry in Box 8: Cash Liquidation
Distributions. Where do I enter this amount on my 1040? If I don't
enter it on my 1040, what is the purpose of this entry?
 
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M

Mark Bole

I received a 1099-DIV with an entry in Box 8: Cash Liquidation
Distributions. Where do I enter this amount on my 1040? If I don't
enter it on my 1040, what is the purpose of this entry?
You don't enter it directly on 1040. You enter it as an adjustment to
the cost of the stock on your Schedule D in the current or some future year.

Liquidation distributions reduce your basis (cost) in the corporation's
stock. Then, if and when you sell your stock, or the liquidated
corporation cancels the stock, or the distribution exceeds your original
basis, you have either a capital gain or loss, depending on the
difference between the liquidation distribution(s) and your original
basis (greater or less than zero).

It gets more complicated if you made multiple purchases of the
stock...the distributions have to be allocated.

-Mark Bole
 

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