Under the "Additional Information" column, it has "Merger". Since 1099-B column 7 is checked "Loss not allowed (x) also not reported (Z), what do I do about the loss of $1K+. Do I report it as a loss and if so how?
This was a straight cash purchase of your 100 shares and there is absolutely no reason I can see that would make this transaction a bit different, from a tax perspective, than any other sale of your stock for cash. That is I believe you may simply report this sale in the usual fashion, indicating proceeds of $2,100, a basis of $3,895.95 and a loss of $1,795.95.
The "Definitive proxy statement relating to merger or acquisition" issued 6/27/2016 said as much (emphasis added):
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Treatment of Holders of Common Stock who are U.S. Persons
The receipt of cash pursuant to the merger will be a taxable transaction to U.S. persons. Generally, this means that a Company shareholder that is a U.S. person will recognize capital gain or loss equal to the difference between (1) the amount of cash the shareholder receives in the merger and (2) the shareholder’s adjusted tax basis in the common stock surrendered therefor. This gain or loss will be long-term if the holder has held the Company’s common stock for more than one year as of the date of the merger. Any long-term capital gain recognized by a non-corporate Company shareholder (including an individual) that is a U.S. person will generally be eligible for a reduced rate of U.S. federal income taxation. The deductibility of capital losses is subject to limitations. If a U.S. person acquired different blocks of Company common stock at different times or at different prices, such U.S. person must determine its tax basis, holding period, and gain or loss separately with respect to each block of Company common stock.
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I'd love to see that 1099-B to see what you're missing or I'm missing, or maybe you need to pick up the phone and talk to the broker to see what's being communicated here, (and I'd love to hear the results of that conversation), but at this point I'd say you have a deductible loss.I expect you have a "real" loss, but one that you can't recognize for tax purposes. That can happen with mergers.
I'd also guess that some amount of "proceeds" were reported to you - why would a 1099-B be issued otherwise? - but that's a mystery since you've not disclosed any.
Why don't you tell us the companies involved? That would help quite a bit.
It would also be very helpful to attache a picture of the 1099-B - any personally information redacted, of course.
Hi Tom, thank you for responding. The original stocks purchased in 2004 was Krispy Kreme (KKD) which merged with JAB Beech Inc. on 7/27/16 The proceed was $2,100, but cost basis was $3,895.95, resulting in a "loss" of $1,795.95. Can I recognize this as a "loss" on my tax return? If I can not recognize the loss, what do I need to report, if any, on my tax return? What do I need to do/show?
This was a straight cash purchase of your 100 shares and there is absolutely no reason I can see that would make this transaction a bit different, from a tax perspective, than any other sale of your stock for cash. That is I believe you may simply report this sale in the usual fashion, indicating proceeds of $2,100, a basis of $3,895.95 and a loss of $1,795.95.
The "Definitive proxy statement relating to merger or acquisition" issued 6/27/2016 said as much (emphasis added):
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Treatment of Holders of Common Stock who are U.S. Persons
The receipt of cash pursuant to the merger will be a taxable transaction to U.S. persons. Generally, this means that a Company shareholder that is a U.S. person will recognize capital gain or loss equal to the difference between (1) the amount of cash the shareholder receives in the merger and (2) the shareholder’s adjusted tax basis in the common stock surrendered therefor. This gain or loss will be long-term if the holder has held the Company’s common stock for more than one year as of the date of the merger. Any long-term capital gain recognized by a non-corporate Company shareholder (including an individual) that is a U.S. person will generally be eligible for a reduced rate of U.S. federal income taxation. The deductibility of capital losses is subject to limitations. If a U.S. person acquired different blocks of Company common stock at different times or at different prices, such U.S. person must determine its tax basis, holding period, and gain or loss separately with respect to each block of Company common stock.
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I'd love to see that 1099-B to see what you're missing or I'm missing, or maybe you need to pick up the phone and talk to the broker to see what's being communicated here, (and I'd love to hear the results of that conversation), but at this point I'd say you have a deductible loss.Thank you Tom. You are absolutely correct, it is a straight stock for cash transaction. I spoke to the broker and the problem was the presentation/layout of their 1099-B. The broker didn't understand it either and had to ask their tax department for clarification. Thank you again for your assistance and advice.