If a privately held REIT is liquidated and shares converted to a different (publicly traded) stock, when do I claim the gain or loss?

[M-MTax]

when you sell the stock you got as a result of the conversion

[cynthCO]

Terrific.   I was worried because the transaction statement from the (publicly traded stock sale, in 2020) only reported the net gain (actually, a loss) from when the conversion happened (2017), thus missing a bigger piece of the overall investment loss.  So I assume IRS will get that smaller number, while the number I report will be bigger.  That might trigger a followup, but I have all my figures/records to document the overall loss.  I was seriously hoping I didn't have to re-do my taxes from 2017 to claim that other chunk of loss.   Thank you!   

[Mike9241]

we can't say for sure.  the transaction could have been wholly nontaxable, partially taxable or fully taxable.  you should have gotten documents from the old REIT explaining the tax consequences of what they were doing. 

[cynthCO]

Didn't get any detailed guidance.  The 1099-DIV for the conversion year (2017) from the REIT had amounts in both Cash (Box8) and Non-Cash (Box 9) Liquidation Distributions.   I subtracted Box 8 from my running adjusted basis, treating that as return of capital.   The Box 9 (non-cash) became the new basis for the stock that the old asset was converted to.  

[Mike9241]

since you got a 1099-div with liquidating distributions, my opinion is that this was a completely taxable transaction (only the REIT can answer for sure - but liquidations usually means the old stock was completely disposed of ) the sales price was the liquidating distributions both cash and non-cash.  your basis in the new stock would be the amount of the noncash liquidating distributions. 

[dlououtman]

What if the liquidating REIT company puts those liquidated funds into a cash account for the brokerage that held the REIT?  How do you claim a loss on the sale if purchase price was a lot more than the liquidation price of the stock?

[GeorgeM777]

Assuming the brokerage held the REIT on behalf of the investors, then each investor would claim their respective gain/loss in the same manner as if stock were sold.  Thus, in TurboTax online, you begin the process of entering your information in the Investment and Savings section under Wages & Income.  In TurboTax CD/download, the process is very similar except you select Investment Income under Wages & Income. 

@dlououtman