I bought a stock of a company that merged with another (I have not sold it yet) and my 1099B is showing the sale of company A and proceeds of $0.02 and in another position "cash in lieu" $30.00. How do I report that on Schedule D? I transferred all the data from my broker to Microsoft Money and imported it to the TaxCut and the transaction is not showing the "cash in lieu" position. I really have no idea what to do with the $30.00. Please, help me!
You did not state the stock so I'll give a made up example; You owned 100 shares of XYZ, basis $10/share. The merger deal was 10 shares of ABC for each 9 shares of XYZ, so for 99 shares, you got 110 shares of ABC, plus $30 cash in lieu for that odd share. Your basis was $10 and it was 'sold' for $30. This pretty well describes what I just found at:
And I also have no relationship with that web site, ALTHOUGH I do know the owner of it.
just today I had this case where shares were exchanged and cash in lieu of a partial share was paid to my client. The
22$ is a short term gain with bought and sold date the same and zero as cost basis. ChEAr$$, Harlan Lunsford, EA n LA
I agree with Harlan. Cash was received in lieu of a partial share of stock. Zero cost basis - short term sale. CPA in Indy
Why wouldn't its holding period be that of the exchanged shares, and its cost basis the cost of the appropriate amount of the latter? Seth
That's how I used to do it; however, the last time it happened Fidelity's "for my convenience only" tax detail showed a short term gain and zero basis. I decided Fidelity might know something I didn't, so that's how I reported it. The zero basis is something that I'd actually heard of before as a simplifying option but the short term bothers me as it suggests that the holding period of the new shares might have been reset as well. This year Fidelity started (again for my convenience) reporting the basis of assets sold or redeemed during the year. They claim to take into account all OID and premium amortization of bonds, but they do not show any of the calculations. I had two muni bonds redeemed in 2006. One that I had held for quite a few years had OID yet Fidelity reported my (sub-par) basis as exactly my purchase price. It's hard to understand how I accrued none of the OID. The other bond involved a premium amortization which might be correct under the complicated new rules, but I'm beginning to wonder if I should trust Fidelity at all for such things. :) Dan Lanciani ddl@danlan.*com
It would be.
However, if the CIL amount is small enough and your basis records aren't good enough, you might want to use zero basis to save yourself the trouble of figuring out what the basis would be.
-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us
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