Yes this is correct. Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain.
As far as the basis, your original stock basis will be used unless you received new shares of stock in the conversion.
If you weren't able to recover your original basis, then this is reported as a loss, which I assume happened in your case.
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