Liquidating distribution on 1099

06-Jan-2020 14:02

If any gain or loss from the distribution is recognized by the partner, it must be reported on his or her return for the tax year in which the distribution is received.

A liquidating distribution (or liquidating dividend) is a type of nondividend distribution made by a corporation or a partnership to its shareholders during its partial or complete liquidation.LLC (taxed as a C corporation) or a shareholder in a C corporation: The profits of the business aren't considered earned income, but rather are considered a return on investment and are taxed at special corporate income tax rates.Dividends paid are considered a distribution of the shareholder's ROI.Form 1120S is the form used for an S-corp's annual tax return.

Shareholders do not have to pay self-employment tax on their share of an S-corp's profits.Roth IRA distributions do not affect your Social Security benefits in any way.