A few comments on this issue:
- ABBA decided to liquidate the Company
- There will be a series of liquidating distributions
- You should know what your basis is in this stock
- You will need to determine if you have any gain on this initial distribution; liquidating distribution minus your stock basis.
- Report this just as you would any other stock sale; form 8949 and Schedule D.
- If your stock basis is higher than the liquidating distribution, then you still need to report it, however, just show the liquidating distribution and basis as the same number which will result in no gain or loss. You still need to report to avoid a matching notice.
- Keep in mind, that you may receive distributions in the following years. If you utilize all your stock basis this year, then in the future years EVERYTHING reported on the 1099-DIV will be capital gain.
*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.
