1099-DIV - box 8

[linda]

I have taxpayer who received 1099 - DIV with over $5,000 in box 8. I talked to the broker who says it is cash received for stock in a company that was taken over by another company. The taxpayer has a basis in the old stock of $21.92 per share and in the new stock of $51.50 per share. It also shows a trade for the new stock on 1099B for over $5,800. Anyone know how to handle this on schedule D? Broker says he did not sell new stock. Thanks for any help you can give.

[JG EA]

I have taxpayer who received 1099 - DIV with over $5,000 in box 8. I talked to the broker who says it is cash received for stock in a company that was taken over by another company. The taxpayer has a basis in the old stock of $21.92 per share and in the new stock of $51.50 per share. It also shows a trade for the new stock on 1099B for over $5,800. Anyone know how to handle this on schedule D? Broker says he did not sell new stock. Thanks for any help you can give.

Maybe this will help -
Pub 550

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. These distributions are, at least in part, one form of a return of capital. They may be paid in one or more installments. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9.

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain. Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock. See Holding Period in chapter 4.

Stock acquired at different times. If you acquired stock in the same corporation in more than one transaction, you own more than one block of stock in the corporation. If you receive distributions from the corporation in complete liquidation, you must divide the distribution among the blocks of stock you own in the following proportion: the number of shares in that block over the total number of shares you own. Divide distributions in partial liquidation among that part of the stock that is redeemed in the partial liquidation. After the basis of a block of stock is reduced to zero, you must report the part of any later distribution for that block as a capital gain.

Distributions less than basis. If the total liquidating distributions you receive are less than the basis of your stock, you may have a capital loss. You can report a capital loss only after you have received the final distribution in liquidation that results in the redemption or cancellation of the stock. Whether you report the loss as a long-term or short-term capital loss depends on how long you held the stock. See Holding Period in chapter 4.