Reply To: Does a “cash liquidation distribution” count as a ‘tax loss sale’?

Home Fairmark Forum Taxation of Investments Does a “cash liquidation distribution” count as a ‘tax loss sale’? Reply To: Does a “cash liquidation distribution” count as a ‘tax loss sale’?

#56166
Kaye Thomas
Moderator

The answer depends on the nature of previous distributions. If they were dividend distributions, they don’t affect basis. If they were nondividend distributions, they reduced your basis, and will reduce the loss you can claim upon receiving the final liquidating distribution. If the total of all your nondividend distributions and liquidating distributions exceeds your basis, you have a gain, not a loss, and you have to report gain in the year those distributions exceed basis, rather than waiting until the year of your final liquidating distribution.