S-corp sale - how to report?

[Catherine]

Client received cash liquidation distribution from sale of midwest family farm (structured as S-corp). The letter accompanying all the documents clearly shows the cash amount distributed and the cost basis to each shareholder of their shares sold, and says that all this goes on the Schedule D -- which I agree with, and which makes sense.

However, the distribution is reported on a 1099-DIV, Box 8, cash liquidation distributions. How do I tie this 1099-DIV in with Schedule D so that the cash liquidation amount doesn't get reported twice? In case this helps, there is also a K-1 Line 9 amount for net section 1231 gain.

Thanks. I should be able to figure this out, but I'm fighting a headache today and anything that isn't automatic just isn't working.

Catherine

[Maribeth]

Have you tried entering the liquidation proceeds in Box 8 on the 1099-Div. I don't believe it goes anywhere, that it is an informational reporting only. Try it and see if that works.

Maribeth

[Catherine]

Have you tried entering the liquidation proceeds in Box 8 on the 1099-Div. I don't believe it goes anywhere, that it is an informational reporting only. Try it and see it that works.

Maribeth

Well, that's the thing. Liquidation proceeds are the same as the business sale proceeds. But the _basis_ for that liquidation is greater than the proceeds, so there is a net long-term capital loss. What I don't know is how to show the capital loss without then getting a letter saying "what about those liquidation distributions from the 1099-DIV?".

Catherine

[Maribeth]

Well, that's the thing. Liquidation proceeds are the same as the business sale proceeds. But the _basis_ for that liquidation is greater than the proceeds, so there is a net long-term capital loss. What I don't know is how to show the capital loss without then getting a letter saying "what about those liquidation distributions from the 1099-DIV?".

Catherine

But I believe that the liquidating dividends on the 1099-div is just the same for reporting purposes as if they were on a 1099-B. In other words, it is not a dividend, but a sale transaction, in liquidation of the corporation. Put the proper amounts on Schedule D and it should be fine.

Maribeth

[Catherine]

But I believe that the liquidating dividends on the 1099-div is just the same for reporting purposes as if they were on a 1099-B. In other words, it is not a dividend, but a sale transaction, in liquidation of the corporation. Put the proper amounts on Schedule D and it should be fine.

Maribeth

Thank you! I've been fretting that while this _should_ go on the D, that with a 1099-DIV we'd get fussed at for not reporting the Box 8 amount on a dividend schedule. I'll proceed as you suggest.