Liquidating distribution worksheet
If you have a dividend reinvestment plan that lets you buy more stock at a price lower than its fair market value, you report the fair market value of the additional stock on the dividend payment date as dividend income.
If under the dividend reinvestment plan, you can invest more cash to buy additional shares at less than their fair market value, you report as dividend income the difference between the cash you invest and the fair market value of the stock on the dividend payment date.
Ordinary dividends are the most common type of corporate distributions.
They are normally reported in box 1a of Form 1099-DIV, and must be included on either Form 1040A or 1040.
Generally, dividends in the form of additional stock in the corporation or stock rights or options are not taxable.
Qualified dividends are ordinary dividends that meet certain requirements and receive special tax treatment, effectively being taxed at the same rates as capital gains.These distributions are actually a return of capital and reduce your basis in the stock, until all your investment is recovered.If you buy stock in different lots at different times, you should reduce the basis of the earliest purchases first. Opening your own business is exciting and thrilling.It's everything that comes after the excitement and thrill has worn off that dictates whether a small business will make it or not.