RollTide68
Level 8

Complete liquidation?  Show as sale of stock

Partial liquidation?  Adjust basis in stock

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain. Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock.