The liquidating distribution should not go on the 7203.
At the individual level, when you enter the final K-1 information and indicate in TT that this is a final K-1, the liquidating distribution will be the "selling" price.
The liquidating distribution will not show up on the tax return of the 1120-S.
As far as the books and records, you can just show this as a distribution (equity) and as cash out.
Dr. Equity
Cr. Cash
In a perfect world all should balance out.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
