1099-DIV Box 9 Partial Cash Liqudation

[mrpuddington]

I've seen related posts on this subject, but nothing that specifically addresses my situation.

In TurboxTax Premier 2022, I entered all amounts from my 1099-DIV including Box 9. When i was done, TT said we would handle the cash liquidation distribution later, and to go to "Investment Income". When I go to "Investment Income" there is nothing that is obvious to help me.

In my case, Box 9 was from stock ticker STOR, but did not represent my entire holding, and I continued to hold the stock thru the end of the year. I saw in post that "... Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock..." This statement is meaningless to me; I know what basis means, but I've never heard of recovering basis. Further, I read where these distributions are treated like capital gains, but I do not know the basis for this either.

Any specific help is appreciated.

[RobertB4444]

When you receive a liquidating distribution what it means is that you are receiving back some of the money that you put into the investment.  Your basis is what you put in to start, box 9 represents them giving you some of that money back.  It isn't taxable until they have given you back all of the money that you put in and then give you money on top of that.  In your case that doesn't seem to apply so you can move on and not worry about it.

@mrpuddington 

[mrpuddington]

RobertB4444, thanks so much for your quick reply. Just to confirm, entering the amount in Box 9 of TT, and not in capital gains/loses, it effectively has no impact on my 2022 taxes. That is, TT ignores my Box 9 entry for calculation of taxes for 2022. Correct?

[GeorgeM777]

Yes, that's correct.  To follow-up on the comments from @RobertB4444, keep your record reflecting the box 9 amount because your basis in STOR is now less than what it was when you originally purchased the stock.  If you should dispose of STOR in the future, you will need to adjust your cost basis given the amount in box 9.  

@mrpuddington 

[mrpuddington]

GeorgeM777 thanks to you as well. I wish that I could mark both answers as best.