Loss on liquidating dividend, 1120-S and 1065

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  • gary@whitsell-cpa.com
    Junior Member
    • Jan 2020
    • 1

    #1

    Loss on liquidating dividend, 1120-S and 1065

    Sale of business in 1120-s and sale of real estate , sole asset in an LLC (1065 filer) resulted in large gains for each. The gain adds to basis of shareholders in 1120-S and members in 1065. Upon liquidation of each entity post sales, the liquidating distribution results in a loss as cost basis now exceeds the distribution. I am trying to determine the nature of this loss; capital loss or ordinary ?
  • kathyc2
    Senior Member
    • Feb 2015
    • 1947

    #2
    If a business was liquidated, that would mean all balance sheet accounts are zero. If the equity accounts have a balance, it would mean there also would be a balance in asset account(s). Assets= Liability + Equity.

    Are you are saying the outside basis is different than inside basis?

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    • New York Enrolled Agent
      Senior Member
      • Nov 2006
      • 1532

      #3
      Nothing to contribute to this thread except good to see Kathyc2 posting again on this board!!!

      Comment

      • kathyc2
        Senior Member
        • Feb 2015
        • 1947

        #4
        Originally posted by New York Enrolled Agent
        Nothing to contribute to this thread except good to see Kathyc2 posting again on this board!!!
        Awww, thx NY.

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