Cash Liquidation Distribution

DEFINITION of 'Cash Liquidation Distribution'

The amount of capital that is returned to the investor or business owner when a business is liquidated. 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.

BREAKING DOWN 'Cash Liquidation Distribution'

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. The gain is then reported on schedule D.

RELATED TERMS
  1. Liquidating Dividend

    A type of payment made by a corporation to its shareholders during ...
  2. Nontaxable Distribution

    A type of dividend that is paid to shareholders of a corporation ...
  3. Liquidity Cushion

    A reserve fund for a company or individual made up of highly ...
  4. Liquid Market

    A market with many bid and ask offers, low spreads and low volatility. ...
  5. Capital Gains Distribution

    The payment of proceeds prompted by a fund manager's liquidation ...
  6. Core Liquidity

    Cash and other financial assets that banks possess that can easily ...
Related Articles
  1. Options & Futures

    Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  2. Term

    What is Liquidity Risk?

    Liquidity risk is the risk of being unable to sell an asset fast enough to avoid loss.
  3. Active Trading

    Understanding Liquidity Risk

    Make sure that your trades are safe by learning how to measure the liquidity risk.
  4. Economics

    What Does Liquidation Mean?

    Creditors liquidate assets to try and get as much of the money owed to them as possible.
  5. Investing Basics

    Understanding Liquidity Risk

    Learn about the two types of liquidity risk: funding liquidity risk and market liquidity risk.
  6. Professionals

    Liquidity Risk

    CFA Level 1 - Liquidity Risk. Learn the sources of liquidity risk. Describes how liquidity risk is created and its effects on portfolio and bond valuations.
  7. Markets

    What Is The Quick Ratio?

    Find out about this liquidity indicator and how it's used.
  8. Investing

    Why Is Liquidity Important?

    Learn more on why liquidity is important to consider when examining a stock, next to its share price.
  9. Mutual Funds & ETFs

    Liquidity

    Liquidity
  10. Investing

    Small Cap Investing: How to Think About Illiquidity

    Do your homework, have a long term view, exercise patience, you'll find that investing in small market capitalization stocks is no riskier than investing in large stocks
RELATED FAQS
  1. Is liquidity calculated by flow?

    Read about the differences between economic liquidity, financial liquidity and asset liquidity and how each respective type ... Read Answer >>
  2. How much liquidity is considered too much liquidity?

    Learn about the risks of holding too much cash or investing in assets that are too liquid, and discover how liquidity is ... Read Answer >>
  3. What is liquidity management?

    Take a look at the different definitions of liquidity, and find out how investors and businesses attempt to reduce exposure ... Read Answer >>
  4. What is liquidity risk?

    Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity ... Read Answer >>
  5. What is the difference between a bank's liquidity and its liquid assets?

    Understand the relationship between a bank's liquid assets and its liquidity and how the financial crisis demonstrated the ... Read Answer >>
  6. What affects an asset's liquidity?

    Learn about what affects an asset's liquidity, including examples of liquid and fixed assets, and how a company's liquidity ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center