The value of marketable securities, such as stock investments that are traded on a public stock exchange, and decreases to your share of the partnership's debt are both treated as cash distributions.
When the total amount of cash distributed is more than a partner's basis in her partnership interest, the difference in the two amounts is a gain.
Cash liquidation distributions are usually considered a nontaxable return of principal.
Credit unions send this sort of distribution to their depositors when they are liquidated as well.
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A current distribution is when a partnership makes a distribution to the partner(s).
Proceeds from cash liquidation distributions are reported on Form 1099-DIV.
However, only the amount of distribution that is in excess of the recipient's original investment is taxable.
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