Barbara owns 100 shares of Bond Corporation stock with a basis of $40,000. Barbara receives two liquidating distributions, including $16,000 paid last year and $20,000 paid in the current year. An additional distribution of an undetermined amount is expected next year. On last year's tax return, Barbara can recognize a loss of
A)$0.
B)$1,000.
C)$4,000.
D)$14,000.

Question

Quizplus · Accepted Answer

In a liquidating distribution scenario, a loss can only be recognized once the entire liquidation process is complete and all distributions have been received. Since Barbara expects an additional distribution next year, she cannot recognize a loss on last year's tax return.

Barbara Owns 100 Shares of Bond Corporation Stock with a Basis