Tax questions

April 04, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions in advance of the April 17 filing deadline.

I got a statement from my broker for proceeds from a fraction of a share. I didn't get the share, I got cash in-lieu, which was $25.71. I have no idea where I report this -- on my Form 1040 or Schedule D, and where on those forms, or how. Do I report the full amount?

You report the amount received on Form 1040, Schedule D. The $25.71 is the selling price. The date of sale is the date shown on the 1099B you received from your broker. The date of purchase is the date you purchased the stock that generated the cash in-lieu payment. The section of Schedule D in which you report the transaction will depend on how long you held the underlying stock that generated the cash in-lieu payment. If the holding period is longer than a year, the gain is long-term. Generally, no cost is shown for these cash in-lieu payments; the entire amount received is reported as gain.

F. Carter Heim, CPA, Heim & Associates

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

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