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Posted by PeterL on March 19, 2008, 1:17 pm
Please log in for more thread options > Looking through my 1099-B, I strangely found that I supposedly sold a
> stock, which I never recalled purchasing in the first place. This
> stock was SFL. Upon further research, I believe what I've discovered
> is that a stock that I did own (FRO) apparently pays "dividends" by
> spinning off shares of SFL to account holders (I believe SFL is a
> subsidiary of FRO). The other strange thing is, the shares of SFL
> seem to be automatically sold and the cash deposited into my account
> (none of my statement show that I hold any positions in SFL).
>
> So it seems this "dividend" is reported on my 1099-B rather than my
> 1099-DIV. Do I treat this as a stock sale, or as a dividend? If the
> brokerage reports this gain on my 1099-B, I would assume I have no
> choice but to report it as a stock sale, since then my numbers won't
> match up with what was reported to the IRS.
>
These spinoffs are a headache. I don't know why the spinoff was sold
immediately. But you need to go back and reconstruct the spinoff
parameters. You need to find out how many shares of the spinoff stock
you get per share of the "mother" company you own. This way you may
get a different cost basis for the "mother" stock. This information
should be available from your broker. Then you need to find out why
the spinoff was sold immediately.
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