How do I report 1099-DIV Box 10?

Box 10 of Form 1099-DIV reports non-cash liquidation distributions. These are assets, rather than cash, that you received when a corporation, mutual fund, or other investment was partially or completely liquidated.

Unlike ordinary dividends, a non-cash liquidation distribution generally reduces your basis (investment cost) in the stock or investment. How you report the distribution depends on your remaining basis after the liquidation.

A non-cash liquidation distribution occurs when an investment is dissolved and distributes property or other assets instead of cash to its shareholders.

The value reported in Box 10 is used to determine whether you have:

Your basis is usually what you paid for the investment, adjusted for certain events over time.

If the Box 10 amount does not exceed your remaining basis in the investment, the distribution is generally considered a return of capital.

Result: No taxable income is reported at that time. Instead, you reduce your basis in the investment by the amount of the distribution.

If the value reported in Box 10 is greater than your remaining basis, the excess is generally reported as a capital gain.

Example:

The first $2,000 reduces your basis to zero. The remaining $500 is reported as a capital gain.

If you receive a final liquidation distribution that completely cancels or redeems your stock and the total distributions received are less than your basis, you may be able to claim a capital loss.

Example:

The unrecovered $1,500 may be reported as a capital loss.

If the liquidation results in a taxable capital gain or deductible capital loss, enter the transaction in:

The transaction should be entered much like a stock sale, using your adjusted basis to determine the gain or loss.