Section 331(a) of the IRS tax code says that if a shareholder is eligible to receive a cash liquidation distribution totaling 0 or more, the distribution must be reported on Form 1099-DIV.The amount reported on a 1099-DIV represents the return of a shareholder’s investment.In 2016 I received cash representing a partial distribution of funds from that sale, the rest is still being held in escrow to be distributed in 2017.For legal reasons, all of the LLC's assets & property were bought for cash, but the LLC continues to exist as a shell for now.
For the past few years it has generated losses as reported to me on the K-1.interests in or derivative financial instruments (including options, forward or futures contracts, short positions, and similar financial instruments) in any asset described in any other subclause of this clause or in any commodity traded on or subject to the rules of a board of trade or commodity exchange, The term “eligible partner” shall not include the transferor or transferee in a nonrecognition transaction involving a transfer of any portion of an interest in a partnership with respect to which the transferor was not an eligible partner. a partnership shall be treated as engaged in any trade or business engaged in by, and as holding (instead of a partnership interest) a proportionate share of the assets of, any other partnership in which the partnership holds a partnership interest, and If the preceding sentence does not apply under such regulations with respect to any interest held by a partnership in another partnership, the interest in such other partnership shall be treated as if it were specified in a subclause of clause (i). 105–34 substituted “section 751(d)” for “section 751(d)(2)”. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain.Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock.