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In addition to a liquidating dividend, companies have a set order in which they must re-pay their owners in the event of a liquidation.Liquidation can occur when a company is insolvent and cannot pay its obligations when they come due, among other reasons.As a return of capital, this distribution is typically not taxable for shareholders.A liquidating dividend is distinguished from regular dividends that are issued from the company's operating profits or retained earnings.In addition to these specific instructions, you also should use the 2019 General Instructions for Certain Information Returns.Those general instructions include information about the following topics. To ease statement furnishing requirements, Copies 1, B, 2, and C have been made fillable online in a PDF format, available at IRS.gov/Form1099DIV.The most senior claims belong to secured creditors, followed by unsecured creditors, including bondholders, the government (if the company owes taxes) and employees (if the company owes them unpaid wages or other obligations).
The payment date is when the company officially mails the dividend checks or credits them to investor accounts.
The ex-dividend date is typically set for two business days prior to the record date.
This is due to the T 3 system of settlement financial markets presently use in North America.
If you are required to file Form 1099-DIV, you must provide a statement to the recipient.
For information about the requirement to furnish statements to recipients, see part M in the 2019 General Instructions for Certain Information Returns.