Get Non-tax Qualified Transfer/liquidation Request

Liquidating distributions (cash or noncash) are a form of a return of capital. Any liquidating distribution you receive isn't taxable to you until you recover the basis of your stock. After reducing your stock's basis to zero, you'll need to report the liquidating distribution as a capital gain on Schedule D.

If you move between mutual funds at the same company, it may not feel like you received your money back and then reinvested it; however, the transactions are treated like any other sales and purchases, and so you must report them and pay taxes on any gains.

No gain or loss shall be recognized on the receipt by a corporation of property distributed in complete liquidation of another corporation.

Tax treatment of mutual funds In general, whenever you sell or exchange shares of a mutual fund, you may have a capital gain or loss that must be reported in the tax year of the transaction.

Any sell of stocks creates a taxable event. A transfer, however, if for retirement, can be classified as a rollover and would not be taxes. A better way to transfer would be to transfer the stocks and not sell, then repurchase.

The simplest way to avoid this is to own mutual funds in tax-advantaged retirement accounts such as IRAs and 401(k)s. You can also make sure to hold the investments for the long term, so that if you do owe taxes, you'll pay them at the lower long-term capital gains rate.

If you switch from an equity fund before one year, you will have to pay short-term capital gains tax at 15%. If you switch after one year, you will have to pay long-term capital gains tax at 10% on the gains exceeding Rs. 1 lakh in a financial year.

Generally, when you receive distributions of your stock from a liquidating corporation, you will recognize a capital gain or loss and would need to report this on Schedule D (Form 1040) Capital Gains and Losses.