Bank of New York

[dyne]

Where should income reported on a 1099-B be reported when labeled as proceeds
from barter exchange? I believe this is cash received in lieu of stock for fractional
shares. It is reported on a form 1099-B suggesting it be reported as interest income. Or perhaps on schedule D with no cost? Or on line 21 as other income? Does anyone know the proper way to report this? Only small amounts are involved. my taxpayers are not sure what it is. The heading mentions Spectra Energy Corp. A website refers to stock. I have been
reporting it on schedule D with no cost.

[travis bickle]

report it on sch d

Where should income reported on a 1099-B be reported when labeled as proceeds
from barter exchange? I believe this is cash received in lieu of stock for fractional
shares. It is reported on a form 1099-B suggesting it be reported as interest income. Or perhaps on schedule D with no cost? Or on line 21 as other income? Does anyone know the proper way to report this? Only small amounts are involved. my taxpayers are not sure what it is. The heading mentions Spectra Energy Corp. A website refers to stock. I have been
reporting it on schedule D with no cost.

i have received quite a number of 1099B's for very small amounts such as you have. i have been reporting them on sch d, listed as "Cash In Lieu . . ."

the only difference being i have always reported it with a cost basis equal to the proceeds, no gain, no loss.

some of my friends, however do it as you do, i.e., with a cost basis of zero.

never had any problems from the service.

[Gretel]

I strongly believe there is no basis in the fractional shares. My understanding is that this type of 1099-B is equal to a 1099-Div, only difference is they these fractional shares are not reinvested.

[FEDUKE404]

Are you SURE it's a "barter exchange"?

That scenario does not make much sense. Duke Energy spun off Spectra Energy in late 2006 and many "new" Spectra shareholders were entitled to a certain number of shares of Spectra Energy as a result of the pay-out formula.

Any fractional shares were immediately "sold" and the proceeds distributed. Assuming this is the case, if the owner had a basis in the Duke Energy shares, that basis is first reallocated to the Duke + Spectra shares. From those Spectra shares, then the fractional portion was "sold" on/about 01/02/2007, which is probably the date of distribution of all new Spectra shares.

Example: 15 shares of Duke gave 7.5 shares of Spectra. Original cost basis of Duke is allocated to group A (15 Duke) and group B (7.5 Spectra). Whatever the cost basis of group B was, THEN the cost basis of the fractional share "sold" is 0.5/7.5 x that amount, and the cost basis of the remaining (whole) shares is 7/7.5 x that amount.

And, yes, there IS a cost basis for the cash-in-lieu proceeds shown on the Form 1099-B, but many/most people don't bother to figure it out.

I'm certain the Spectra Energy web site has more info in its IR section.

FE

[dyne]

Bank of New York

The heading at the top of the form 1099-B states: Proceeds From Broker and
Barter Exchange Transactions. In the description it says: Common Stock.
I did not notice the Common Stock before. So it should be reported on schedule D, which is where I have been reporting it. Thanks for the comments.