exchange of stock

[dyne]

I recently saw a form 1099-B which reported stock exchanged. Since Section 1031 specifically does NOT allow stock to be exchanged tax free as a like kind exchange, what is the purpose in a 1099-B listing stock exchanged? Is there some type of perferential tax treatment allowed?

[Nashville]

Overboard

Dyne I think the brokerage house may be carried away with new reporting requirements, and have expanded their 1099-Bs to include any stock that is extinguished from a portfolio regardless of reason.

I think it is clear that the basis of the exchanged stock is the same as the old stock, irrespective of what is implied by Sec. 1031.

But I would have a problem reporting a disposition on Sch D, and receiving a 1099-B means that some reporting has to occur. I suppose you could report the cost as having equal value so no gain/loss exists. But we already do that on personal residences and several other situations. We are having to report meaningless stuff on Sch D just to avoid being dinged by IRS matching programs.

[Kram BergGold]

Tmi

The brokerage is just describing that the stock was exchanged as opposed to being sold, or redeemed. To you it is just a sale to be treated as any other sale except the basis may be affected as some basis could be allocated to the stock now owned and some to the stcok that was exchanged.

[Burke]

We are having to report meaningless stuff on Sch D just to avoid being dinged by IRS matching programs.

I just returned from a tax seminar where IRS people discussed the new 1099B's showing basis. I asked if TP's basis records differed from broker's basis, was this going to be a problem or were they going to match that too? Answer: "we're not that good yet." So while it might be convenient for preparers, can we depend on it?