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I've been accumulating RSU and Compensation via stock (against my better judgment, but that's another topic)

Now the company liquidated. e-trade documentation for 1099-div shows that i received money for "8. Cash liquidation distributions" But e-trade unhelpful system shows no transaction history and no cost basis for anything (despite all being in the covered-lot category)

Going back to the several years of receipts I accumulated for the stock plan (there are also RSU grants) I can somewhat figure out the cost basis.

Let's say the cost basis average $50. The liquidation was based on $110, but $100 was paid in money, and $10 was kept on a title that will be further distributed in the future (and is non-tradeable until then, but was valued at $10 when de-listed)

assuming 1000 shares, is it correct to subtract the cost (in the example $50, 1000*($100-$50)=$50.000) of the value when entering the gains on the irs forms? Or must I enter the full value ($100.000, which is what is shown on 1099-DIV field 8) and specify the cost ($50.000) somewhere else?

How is the left over title (stock?) that is non-tradable impact the calculation of the cost-basis?

Another question, is there anything i can gain from 100% of those shares being held for what the IRS consider long-term if this was a proper sale?

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See pub 550 (also available in PDF, go up to the nav) although 2019 hasn't been posted or released yet and based on recent experience it may not be for a while (and when it is my link may break):

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. These distributions are, at least in part, one form of a return of capital. They may be paid in one or more installments. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9.

(Aside: that apparently got missed. On the official form for 2018 and 2019 it's box 9 or 10 instead of 8 or 9 as was the case for 2017 and earlier. Did e-trade give you an official 1099-div or a substitute they printed or formatted themselves -- in which case they may also have failed to update the labels?)

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain. Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock. See Holding Period in chapter 4.

Since the amount you received exceeds your basis, you need to report a capital gain. I can't find specific instructions for this case and you don't have a 1099-B to start from (and match), so I would just put it on 8949 with (d) = received and (e) = basis.

$100 was paid in money, and $10 was kept on a title that will be further distributed in the future (and is non-tradeable until then, but was valued at $10 when de-listed)

Is this a new stock (replacing the old one) or the old one? If the former, did they include the $10 in the 1099 -- i.e. are they reporting $110/share or $100/share? If the former, they are treating it as having FMV, which will increase your current gain (and tax), but leave you with $10 basis in the new stock, so that if at some future time you sell or redeem it, your gain is reduced or loss increased (and tax reduced). If the latter, they are treating it as worthless now, but potentially valuable in the future, and if so anything you receive for it will be all gain.

If it's the old stock they definitely shouldn't be reporting it as 'distributed' and they're saying they actually distributed $100 and estimate the remaining net assets to which the old stock is entitled are worth $10 which may become available in the future, either as a final distribution or because you are able to sell or redeem; since your basis in the old stock is reduced to zero as above, anything you realize for it in the future is all gain.

is there anything i can gain from 100% of those shares being held for what the IRS consider long-term

Probably. Since you report this as a capital gain your holding period applies, and it is taxed at lower rates if long-term. The exact effect can depend on many other things in your tax situation, which you did not and probably should not describe.

How is the left over title (stock?) that is non-tradable impact the calculation of the cost-basis?

See above.

PS: when did you get this 1099? Does it, or maybe the webpage you got it from, say anything like 'tentative', 'estimated', or 'subject to correction'? Brokers fairly often issue corrected 1099s as late as March, so it is not inconceivable that if you wait a bit they will provide a different version which might be more helpful. (Then again it could be even worse.)

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  • Thank you! I also found the liquidation memos and they say par value $0.001 per share so I am assuming they are considering them worthless and in the future i should report any gain (ha!) with a zero cost basis, i guess. – gcb Feb 23 at 8:42

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