I own stock in a foreign corporation (Rolls-Royce). Last year (2020), the company had a Rights Issue, but US investors were not allowed to participate. Subsequently, the company considered the Rights to be lapsed, issued new ordinary shares and sold them on my behalf, resulting in a cash payment to me. No US tax forms (1099) were issued.
I can’t decide how to account for this from a tax perspective. My options so far are:
1) Treat the payment as a non-dividend distribution, which is not taxable, and adjust the basis of my existing stock. No entry required on my 2020 tax return.
2) Treat the payment as if I had sold the Rights, and calculate the gain or loss using established methodology for Rights, and enter the information on form 8949.
3) Treat it like cash in lieu of a fractional share, and report it on schedule D, or maybe form 8949.
I would appreciate any advice or insight on how to input this to turbotax (or not input it).
