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S corporation cash liquidation distributions

i received a 2019 1099 div, with box 9 reflecting cash liquidation of eg 100k

my "shareholder basis worksheet" reflects year end value of 60k

after deducting basis, i have 40k left as income; however, for 2018 i already paid capital gains tax on more than 1/3 of the 100k

do i now pay capital gains taxes on the remaining 20k, or on the full 40k?

is this income reported on sch B pt II, with nothing to report on forms 8960 or 4797?

 

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Accepted Solutions
ThomasM125
Employee Tax Expert

S corporation cash liquidation distributions

The income you paid tax on in 2018 (1/3 of the $100,000) would increase your tax basis, so that would reduce your taxable gain in 2019. So, you would pay tax on the $20,000 in 2019.

 

The liquidation of a partnership interest would be considered capital gain income, and as such it would be used to calculate net investment tax on form 8960. However, it would not be considered a sale of business assets, so form 4797 would not be involved.

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3 Replies
ThomasM125
Employee Tax Expert

S corporation cash liquidation distributions

The income you paid tax on in 2018 (1/3 of the $100,000) would increase your tax basis, so that would reduce your taxable gain in 2019. So, you would pay tax on the $20,000 in 2019.

 

The liquidation of a partnership interest would be considered capital gain income, and as such it would be used to calculate net investment tax on form 8960. However, it would not be considered a sale of business assets, so form 4797 would not be involved.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

S corporation cash liquidation distributions

thank you for your kind reply

Irene2805
Expert Alumni

S corporation cash liquidation distributions

On behalf of ThomasM125, you're welcome!

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