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Subject Author Date
How to report cash in lieu on Schedule D U & J Taras 04-03-2007
Posted by U & J Taras on April 3, 2007, 7:04 pm
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 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!

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Posted by joetaxpayer on April 4, 2007, 2:20 pm
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 U & J Taras wrote:

> 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.

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: http://www.fairmark.com/capgain/mergers.htm
a web sight I have no relationship with, nor any financial
interest in. I just googled "cash in lieu" and this was the
first hit.

JOE

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Harlan Lunsford on April 5, 2007, 1:49 am
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joetaxpayer wrote:
> U & J Taras wrote:

>> 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.

> 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: http://www.fairmark.com/capgain/mergers.htm
> a web sight I have no relationship with, nor any financial
> interest in. I just googled "cash in lieu" and this was the
> first hit.

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

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Seth Breidbart on April 9, 2007, 2:51 am
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> 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.

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

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Dan Lanciani on April 10, 2007, 9:47 am
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>> 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.

> 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?

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

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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