Where do I enter Form 1099-DIV, Line 9 "Cash Liquidation Distributions"?

[davetodd11]

Where do I enter Form 1099-DIV, Line 9 "Cash Liquidation Distributions" for the 1040 returns?

I don't understand what Intuit's logic was when they designed the 1099-DIV entries sections of the Schedule B in the 1040 return.  The Dividend Income Worksheet in NO WAY resembles the flow of the actual 1099-DIV, and is tedious to follow.  You apparently think you did us a favor by organizing most of the 1099-DIV data into 6 groups on your worksheet, but this worksheet does not cover all of the boxes from Form 1099-DIV.  Notably missing are Boxes 9 and 10 of the 1099-DIV which report Cash & Noncash Liquidation Distributions, respectively.

I do a lot of 1041 trust returns.  Comparing the the 1099-DIV worksheet in the 1041 to the Dividend Income Worksheet in the 1040 returns, you'd think these two returns were developed on tow completely different planets.  The 1041 version flows almost perfectly in sync with the 1099-DIV, (except what you label as Box 14 in your worksheet is actually Box 16 on the 1099-DIV).  Why can't you incorporate the format of the 1041 worksheet into the 1040 returns?  That would certainly make our lives considerably easier.

[BobKamman]

Sometimes it helps to learn the law before learning the software.  If your client receives a cash liquidation distribution, you have to find out the basis in the stock that is being liquidated.  Once the distributions exceed basis, or the final distribution is made so you can determine a gain or loss, you put it on Schedule D.  Intuit can't ask your client questions.  You have to do that.  

I do a lot of 1041's also.  I also know that the 1040 and the 1041 returns are developed by two completely different teams at IRS, or at least by different people on the same team but at different times.  There is no Schedule B for the 1041, in case you haven't noticed.  I can't walk and chew gum at the same time, but I have learned how to work with two different forms.  

The "jump" for the Dividend Worksheet and Interest Worksheet, where you double-click to enter Additional Information, can sometimes be quirky.  Sometimes it takes me 15 seconds to remember where amortized bond premium or accrued interest paid should go. But I figure that if Intuit changed things around to make it easier this year, Congress and/or IRS would change the law and/or forms next year so it would just have to be rearranged again. 

[davetodd11]

Bob,

Thanks for the quick response.  Yes, I'm well aware there is no Sch B for 1041.  My point is, and maybe this is just my OCD kicking in, that consistency makes the world a better place.  When I have the same tax form that I enter into two different modules, I don't think it's asking too much that the input formats are identical, or nearly so.  This particular worksheet formatting issue would seem to be immune from the perils of tax law changes.

As for entering the basis, why couldn't there be a jump to a worksheet where you would add that in?

[BobKamman]

I did a Google search for "cash liquidation distributions" and it found 15,500 results.  The first one, from Investopedia, tells you all you need to know:

Understanding Cash Liquidation Distribution

Proceeds from a cash liquidation distribution can be either a non-taxable return of principal or a taxable distribution, depending upon whether or not the amount is more than the investors' cost basis in the stock. The proceeds can be paid in a lump sum or through a series of installments.

Often, proceeds from cash liquidation distributions are reported on Form 1099-DIV. The IRS mandates that distributions of $600 or more must be reported on Form 1099-DIV. Any taxable amount the investor receives is reported on Schedule D,  the capital gains and losses statement that is filed with the IRS form 1040 during yearly tax filings.

Payments in excess of the total investment are capital gains, subject to capital gains tax. If the amount the investor receives is less than their original cost basis invested in the stock, the investor may report a capital loss which reduces their tax bill. This loss can only be reported once the firm issues a final cash liquidation distribution.

https://www.investopedia.com/terms/c/cash-liquidation-distribution.asp 

[davetodd11]

Thanks.  Yes, I saw basically the same exact info in another Intuit post and one from Drake.  I'm just looking for the developers to come up with a better way for us to enter the data

[BobKamman]

"As for entering the basis, why couldn't there be a jump to a worksheet where you would add that in?"

And then the worksheet would lead to nowhere, because the partial liquidation might be paid over several years, and the basis is not yet reduced to zero?  And then the broker might be keeping track of it also, and when the final payment is made, it will report it on the 1099-B.  It would be like entering the cost of home improvements for 20 years, so you would have the information when the client finally sells the house.  IRS doesn't want the information, there is no need for the software to accumulate it, and investors should keep track of their basis with their own system, not one that I have to pay for when I buy tax software.