Capital Transactions With No Sale of Capital Assets

1.) Worthless shares of stock

2.) Worthless bonds

3.) Retirement of bonds with interest coupons or in registered form

4.) Option gains and losses

5.) Liquidating dividends

6.) Liquidation of partnership

7.) Short sales

These transactions are considered capital transactions even if there were no capital assets sold.

When a partnership is liquidated each partner realizes either a capital gain or loss, taking into consideration the holding period of his partnership interest. The formula for computing gain or loss is here:

ROI upon Liquidation - (Investment on Partnership + Share in Undistributed Net Income) = Gain/loss in Partnership Liquidation