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Liberty456
New Member

I was a stockholder in a company that sold in Sept 2020. Money was held back in escrow. I've received disbursements throughout 2021. Where do I input this income?

 
4 Replies
Critter-3
Level 15

I was a stockholder in a company that sold in Sept 2020. Money was held back in escrow. I've received disbursements throughout 2021. Where do I input this income?

Dispursements are not necessarily the taxable income to be reported ... they should be sending you a final K-1 form.  Contact them to see when this will happen. 

Critter-3
Level 15

I was a stockholder in a company that sold in Sept 2020. Money was held back in escrow. I've received disbursements throughout 2021. Where do I input this income?

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.

Opus 17
Level 15

I was a stockholder in a company that sold in Sept 2020. Money was held back in escrow. I've received disbursements throughout 2021. Where do I input this income?

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?  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Liberty456
New Member

I was a stockholder in a company that sold in Sept 2020. Money was held back in escrow. I've received disbursements throughout 2021. Where do I input this income?

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. 

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