UPS Lifer
Well-Known Member
The distributions that I received were claimed in each tax year as a outright gain by my accountant. I have two letters that state how OPL planned to treat the distribution as a "liquidating distribution".
This letter is dated May 18, 2005 and it says in part:
"OPL plans to treat the distribution as a liquidating distribution, which would be treated as a payment in exchange for stock for U.S. federal income tax purposes. A shareowner would recognize capital gain or capital loss on the difference between (i) the value of the consideration received in a liquidating distribution for each share of OPL stock and (ii) such shareowner's adjusted tax basis in each share. .... In this case, where there will be a series of liquidating distributions, amounts paid would first be applied to basis; distributions would only be taxed as capital gain once the aggregate amount of the distributions exceeds such basis. Capital loss on a series of liquidating distributions may be recognized only when a shareowner receives the final liquidating distribution with respect to his or her shares.
There is more to the letter but that is the meat and potatoes. The letter also talks about long term (over 1 year) vs. short term (less than 1 year) capital loss or gain.
It sounds to me that anything you get over the cost basis is a gain. If you received less of a distribution than the cost basis you can claim a loss. Long term vs short term gain will depend on how long you held the stock vs getting the distribution. Make sure you get a tax professional to help you.... especially with that portion.
I looked up the definition of "Cash Liquidation Distribution". According to MSN Money here is the definition:
Cash Liquidation Distribution
A return of capital that you receive when a corporation is being partially or completely liquidated. If your Form 1099-DIV shows a cash liquidation distribution, it is not taxable unless the total amount of the distribution you receive exceeds your investment in the stock.
This letter is dated May 18, 2005 and it says in part:
"OPL plans to treat the distribution as a liquidating distribution, which would be treated as a payment in exchange for stock for U.S. federal income tax purposes. A shareowner would recognize capital gain or capital loss on the difference between (i) the value of the consideration received in a liquidating distribution for each share of OPL stock and (ii) such shareowner's adjusted tax basis in each share. .... In this case, where there will be a series of liquidating distributions, amounts paid would first be applied to basis; distributions would only be taxed as capital gain once the aggregate amount of the distributions exceeds such basis. Capital loss on a series of liquidating distributions may be recognized only when a shareowner receives the final liquidating distribution with respect to his or her shares.
There is more to the letter but that is the meat and potatoes. The letter also talks about long term (over 1 year) vs. short term (less than 1 year) capital loss or gain.
It sounds to me that anything you get over the cost basis is a gain. If you received less of a distribution than the cost basis you can claim a loss. Long term vs short term gain will depend on how long you held the stock vs getting the distribution. Make sure you get a tax professional to help you.... especially with that portion.
I looked up the definition of "Cash Liquidation Distribution". According to MSN Money here is the definition:
Cash Liquidation Distribution
A return of capital that you receive when a corporation is being partially or completely liquidated. If your Form 1099-DIV shows a cash liquidation distribution, it is not taxable unless the total amount of the distribution you receive exceeds your investment in the stock.
