Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. These distributions are, at least in part, one form of a return of capital. They may be paid in one or more installments.
If you have not received all of your contributions back from this investment, you can leave out the amount in Line 9. Keep track of each amount and continue to reduce your cost basis until zero, then all of these type of distributions will be taxable.
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