1099B has proceeds listed under 8949 with no cost basis (N/A) for a one-time Contingent Value Payment, what do I use for cost basis?

[umasi]

Hi,

I have a situation where my 1099B includes an item with proceeds but no cost basis and I am unable to file without this information.

My Tax Reporting Statement from my brokerage lists the transaction under "Other Transaction - Cost basis not reported to IRS Form 8949(x)".  There is a proceed amount but "cost basis" and "Gain or Loss" is listed as "N/A".

Based on my research the proceeds appear to be from a Contingent Value Right (CVR) of $2 per share that was on stocks that were part of a cash buyout merger. My holdings were bought out at the time of the merger (2019) and the proceeds were reported already. 

In this case would the cost basis be the total amount of the CVR payment ($2 x number of shares) or would the cost basis be zero as it would be like a cash windfall? Or something else?

Thanks in advance for your help!

[DianeW777 · Accepted solution]

If you had not already sold all of your holdings you would have a basis.  Since you used all of your cost basis at the time of sale you have no cost basis on the contingent payment rights (CVRs) received in 2022.   

For future use:

• The CRVs FMV on the date received divided by the total FMV of the consideration received and multiply that by your original cost basis to allocate basis to the CVRs, you should keep track of this by lots.  This would provide the cost basis. 

[umasi]

Hi DianeW777,

Thank you so much for the explanation! It was very helpful.

Warmest Regards,

umasi