Wait a sec ... you said the sale was in 2020 so that should have been reported on the 2020 return so now all they were distributing was what was held back in escrow to cover unexpected expenses. Again the company should have let you know if any of the distributions were now taxable ... usually they are not as it is just your money coming back to you.
Generally speaking, all the income should have been reported in 2020, although there might be a tax argument to delay reporting depending on what the escrow account was for and whether you had access to the money or not.
Also, the entire proceeds is not necessarily taxable, only your gain. Your gain is, roughly speaking, the difference between what you originally invested and what you received.
Was this a publicly traded company or a private company? Do you know what kind of company?
Thank you for the input so far.
It was a privately held corporation sold to a LLC.
Some money was held back for escrow and expense funds.
I received tax paperwork for the money I received immediately after the sale in 2020, but nothing regarding the disbursements over the last 2 years (the sale is still not finalized!)
I can see how the disbursements would not be taxable and will see if I get a K-1 when it is finalized.