2011 Sale reported on 2012 1099-B

[DonPriebe]

Client received a 2012 1099-B showing a sales date of 8/12/2011. This was a sale of an interest in an employees' benefit trust as a result of a corporate takeover that was consummated in 2011. The 1099-B indicates "long term" and of course does not provide any basis information. Besides the basis problem, does anyone know (or have a strong opinion on) on which tax year's tax return this sale should be reported?


[2011 wouldn't be a bad answer; he has also just received a corrected 1099-DIV that significantly impacts his 2011 dividend income, so there's an amended return to be done anyway.]

[Koss]

2011 or 2012

In general, if the transaction occurred in 2011, then it should have been reported on the 2011 tax return, so an amended return should be filed for 2011.

But why has the transaction been reported by the payor on Form 1099-B for 2012?

In your post, you said that the "corporate takeover" was consummated in 2011.

But if the employee did not actually receive the money in question until 2012, then the transaction that gave rise to the gain may not have occurred until 2012.

In this sense, the date of sale on the Form 1099-B may be inaccurate. When did the taxpayer have a full, unrestricted right to the money? We're talking about the doctrine of constructive receipt. If the "benefit trust" wasn't liquidated until 2012, then the gain may be attributable to 2012.

The basis issue may not be as complicated as it seems. If the employee was not contributing to the benefit plan, the basis is probably zero.

BMK