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I work in the United States. My Netherlands based employer offered me to buy into an employee equity program organized as a Dutch BV. My basis is approximately $4000 from two purchases in 2011 and 2013. I received annual dividends each year which I have reported as dividends. Since the 2013 purchase I have always had XXX shares.

The company was purchased by a different European company in 2016. The cash payout to the employee equity BV was held in escrow and paid out over 3 years as dividends, on the order of $6000 in 2016 and $1000 in 2017. I have reported these (and foreign tax withheld) as dividends. The reporting format is a Dutch Dividend Note (not a 1099) and states these payments are dividends.

The final dividend was paid in September 2018, and was $40. There was a year end statement that my XXX shares had $0 value at the end of the year. The shares were formally liquidated at $0 value in March 2019.

Question:

My interpretation is that I report the dividend in 2018 as a dividend, and the liquidation event at $0 in 2019 is the sale. Is this correct? While this makes sense to me, I will end up with my entire basis as a capital loss against proceeds of $0 in 2019.

Alternates:

  • Do I consider the final 2018 dividend as the sale and wrap this up now?
  • Do I need to correct my 2016 and 2017 returns to consider the reported dividends as sale proceeds instead (contrary to the Dutch statement) and allocate the basis somehow?

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