1099-B and stock re-investment

[POCAHONTAS]

Client received 1099-B and made a gain on their stock, she says that she took all the stock and re-invested it with another company so since she re-invested is the gain still taxable??

thanks

[erchess]

Wait

Did she get stock certificates from one broker and then take them (with or without additional cash it makes no difference) to another broker? That should be a non taxable event and I'm not sure what you do given that a 1099B was issued.

Or did she sell stock at one broker and take the cash to another broker? In that case she has a taxable gain and the fact that she bought stock in the same company with her proceeds is irrelevant.

NB as I understand it she did have a gain on the stock and not a loss in which case the wash sale rules would apply if she bought the same stock back.

[POCAHONTAS]

erchess
I know she went from one company to another company but whether she took cash or stock certificates I am not sure I would have to ask.

I thought that if you receive a 1099-B a gain or loss is always reported?? (but then this might be in the case of when it is not re-invested)

thanks

[FEDUKE404]

Forms 1099-B vs DIV

erchess
I know she went from one company to another company but whether she took cash or stock certificates I am not sure I would have to ask.

I thought that if you receive a 1099-B a gain or loss is always reported?? (but then this might be in the case of when it is not re-invested)

thanks

I think there may be some confusion here:

If your client received a Form 1099-B, there was some kind of disposition of the stock. Whether historically there were or were not any reinvested dividends is irrelevant. The document should show the number of shares sold to assist you. A mere transfer of a stock from one company to another will not generate a Form 1099-B. You should be aware that some "in-house" investments cannot be transferred to another brokerage firm, so a requested "transfer" of such may well generate a sale.

As for any reinvested dividends, the Form 1099-DIV shows the annual taxable amount regardless of whether the dividends were or were not reinvested. Some stocks will "cover" the brokerage fees for the new stocks purchased with the dividends, and you may see a slightly higher amount of income than might otherwise be expected. Such fees increase the underlying cost basis of the reinvested shares and should be tracked.

FE