Partnership Taxation: Liquidating Distributions

Summary

This practice note discusses the taxation of a partnership's or a limited liability company's (LLC) liquidating distributions to its partners or members. Liquidating distributions are the distributions, or the series of distributions, through which a partnership or LLC terminates a partner's or a member's interest in the entity. Liquidating distributions differ from current distributions, which are the distributions that a partnership or LLC makes to distribute its earnings and other property to its partners or members in the normal course of business as an on-going entity.