I was part of the same Rolls Royce rights issue. My rights were sold, and I received a cash payment. The Rolls Royce investor relations website states the following:
Although the U.S. federal income tax treatment of the Rights issue is not free from doubt, RR believes
it is reasonable to treat the distribution of Rights to RR's shareholders as a non-taxable distribution for U.S. federal income tax purposes. On the Distribution Date, the fair market value of the Rights was more than 15% of the fair market value of the Existing Ordinary Shares with respect to which the Rights were issued. As a result, U.S. holders that exercised or sold their Rights must allocate the tax basis of their Existing Ordinary
Shares between the sold or exercised Rights and the Existing Ordinary Shares with respect to which the Rights were issued, in proportion of the Existing Ordinary Shares and Rights' respective market values, determined as of the Distribution Date. In the event that a U.S. holder allowed the Rights to lapse without selling or exercising them, the Rights are deemed to have a zero basis and the tax basis of the Existing Ordinary Shares with respect to which the expired Rights were distributed remains unchanged from their tax basis prior to the Rights issue.
I received a 1099-B for this. How would this be reflected in TurboTax? TurboTax is asking for the date acquired and cost basis. Since it is considered a Non Taxable distribution, it would involve lowering the cost basis of RR stock by the amount of the payment. Not sure how to reflect this in TurboTax.
