WAGES & INVESTMENT INCOME

Liquidation distributions, reported on Form 1099-DIV, are distributed when a corporation in which you own stock is going through a partial or complete liquidation. They may be received in the form of cash or noncash. An amount designated as a cash or noncash distribution is often not taxable, but is a reduction of your basis in the stock.

So when you dispose of the stock, your basis for figuring gain or loss is reduced by the amount in this box. (It will result in a larger gain or a smaller loss when you dispose of the stock.)

However, if the basis of your stock is already zero, or is less than the amount shown in this box, the amount is taxable and you need to report the amount that exceeds the basis in your stock as either a long-term or a short-term capital gain.

If this liquidation is a final distribution from the company, you need to report a sale of the stock on Schedule D.