Nordicus Partners Corp (NORD)

[greasemonkeyshoes]

Definition and Tax Treatment of Liquidation Dividend(LD).............
A simplistic primer to LD and with an example included.
Type:
https://www.accountingtools.com/articles/2017/5/16/types-of-dividends
"When the board of directors wishes to return the capital originally contributed by shareholders as a dividend, it is called a liquidating dividend, and may be a precursor to shutting down the business. The accounting for a liquidating dividend is similar to the entries for a cash dividend, except that the funds are considered to come from the additional paid-in capital account."

LD:
https://www.accountingtools.com/articles/2017/5/13/liquidating-dividend
"A liquidating dividend is a distribution of cash or other assets to shareholders, with the intent of shutting down the business."

Tax treatment of LD:
https://www.investopedia.com/terms/c/cash-liquidation-distribution.asp
"Often, proceeds from cash liquidation distributions are reported on Form 1099-DIV. The IRS mandates in section 331(a) of the IRS Tax code that distributions of $600 or more must be reported on Form 1099-DIV. Any taxable amount the investor receives is reported on Schedule D, the capital gains and losses statement that is filed with the IRS form 1040 during yearly tax filings.

Payments in excess of the total investment are capital gains, subject to capital gains tax. If the amount the investor receives is less than their original cost basis invested in the stock, the investor may report a capital loss which reduces their tax bill. This loss can only be reported once the firm issues a final cash liquidation distribution."

Example of a Cash Liquidation Distribution:
XYZ Corporation is going through liquidation. Bob and Bette are shareholders. Bob' s cost basis of his shares in XYZ Corp. is $50. When he receives a cash liquidation payment of $75, $50 of that is a return of capital and is not taxable, while $25 is the gain and is taxable. Bette has an original cost basis of $100. When she receives her payment of $75, it does not cover his original cost basis in the stock. So Bette has a loss of $25.

For TurboTax users:
https://ttlc.intuit.com/community/taxes/discussion/1099-div-box-9-how-to-report/00/134868