I have a form a 1099B with cash in lieu rate of 58.07, and 53.37 proceeds. I do not know where to enter the 58.07, and what to enter on cost or other basis.

[TomYoung · Accepted solution]

TurboTaxDianeW, EA stated"The cost basis will be zero because this is normally payments made to investors who received fractional shares..."

While I'd bet that the majority of cash in lieu transactions do get reported with a $0 basis, that's most likely because most people don't understand that a fractional share does have a reportable basis.

You'll use the "Stocks, Mutual Funds, Bonds, Other" interview and tell TurboTax that you do have a 1099-B. 

The cash received "in lieu" ($53.37 I assume), is reported as the proceeds of a sale of the fractional share. 

To come to the correct basis to use you divide the dollar amount of basis for all the shares received, including the fractional share.  That gives you a per share basis figure.  Then multiply that per share basis figure by the fraction of a share you sold, and you have your basis.  Of course you're always free to report a basis of $0 and pay taxes on the entire proceeds.

Tom Young

[DianeW]

@TomYoung Thank you for the additional information.

[DianeW]

The cost basis will be zero because this is normally payments made to investors who received fractional shares as a consequence of stock splits, corporate mergers and reorganizations. For instance, as a result of a merger, an investor is entitled to receive 17.25 shares. Since the company only issues whole shares, cash payment is made for the .25 share.

You can use various as the purchase date, and the holding period is based on whether you held the stock for more than one year (long term) or one year or less (short term).

Please follow the steps below for this transaction reported to you on a Form 1099B.

1. Sign into your TurboTax account (Premier will work for this transaction)
2. Select Federal in the black navigation panel, left
3. Search (upper right) for 1099b > Jump to 1099b
4. Continue to follow the screens and make your entry.
5. Click the images attached to enlarge and view for assistance.