Proceeds not reported on 1099B

[tlzhu]

The form 1099-B I received only has boxes 8-11, which show 0 in all boxes.

I also received "Proceeds Not Reported to the IRS", which shows some procedures in the following table

LONG TERM TRANSACTIONS [Ordinary gains or loses are identified in the additional information column)

Report on Form 8949, Part II, with Box F checked.

This section shows some procedures for  ALTABA INC ESCROW.

Should I report this procedure, and how should I do it as these procedures were not reported in the 1099-B.

Thanks a lot.

[GeorgeM777 · Accepted solution]

Yes, the transaction involving Altaba Inc. Escrow probably needs to be reported.  Based on the Investor FAQs for Altaba, it appears that the Altaba Fund is liquidating as a result of various legal proceedings.  Those Investor FAQs provide the following information about the liquidation and dissolution, and further what these events mean from a tax perspective. 

In general, distributions made pursuant to the Plan of Complete Liquidation and Dissolution, including the pre-dissolution liquidating distribution, will be treated for U.S. federal income tax purposes as a series of distributions in complete liquidation of Altaba in which amounts received by stockholders are treated as full payment in exchange for their shares of Altaba common stock.

A liquidating distribution received by a U.S. stockholder will first be applied against and reduce the stockholder’s adjusted tax basis in its Altaba common stock, before the stockholder recognizes any gain or loss.  A U.S. stockholder will recognize gain as a result of a liquidating distribution to the extent that the aggregate value of the liquidating distribution and any prior liquidating distributions received by the stockholder with respect to a share exceeds the stockholder’s adjusted tax basis in the share.  A U.S. stockholder generally cannot recognize a loss on a liquidating distribution until the final liquidating distribution is made, and then only if the aggregate value of all liquidating distributions with respect to a share is less than the stockholder’s adjusted tax basis in the share.  If a U.S. stockholder holds different blocks of Altaba common stock (generally as a result of having acquired shares at different times or at different prices), gain or loss is calculated separately with respect to each such block.  Any gain or loss recognized by a U.S. stockholder will be capital gain or loss provided the stockholder holds its Altaba common stock as a capital asset.

As the above information suggests, for tax purposes, you must reduce your basis in your Altaba stock by the amount of the distributions you have received.  In other words, you are not paying tax on the distributions per se because the distribution(s) are a return of your capital.  It is only when you have recovered your basis in the stock, that you might have a capital gain.

Does any of the above relate to your situation?  In other words, are you a shareholder in Altaba stock?  Follow-up with any additional information, and then we can provide some additional information about how you should report the information on your 1099-B.  Also, here is a link to the Investor FAQs webpage from which the above information was obtained.  

Altaba FAQs

[tlzhu]

Thanks a lot, GeorgeM777.

Yes, I am a shareholder in Altaba stock.  I think I should report this on my tax return. But, the 1099-B that I received does not include this transaction, so I don't know how should I report this transaction into TurboTax. I am considering reporting this transaction by choosing "No" for the question "Did you get a 1099-B". I don't know if this is the right way to do. Thanks again.

[GeorgeM777]

Yes, report the transaction even though it is not on your 1099-B.  You enter the transaction into TurboTax in the same way you would enter a regular stock transaction.  Here are the steps to follow if you are using TurboTax online; however, the steps are very similar if you are using TurboTax CD/download:

1. Sign-in to your account.
2. Select Federal in the left margin.
3. Select Wages & Income, left margin.
4. On Your Income and expenses screen scroll down to Investment and Savings.
5. Click on the drop-down arrow if necessary to reveal more options.
6. Click Start/Revisit across from Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
7. At the screen Let's import your tax info, you will see the option to Enter a different way.  Select Enter a different way.
8. Then select the type of investment.  Your specific transaction will not be listed, so just select the most appropriate answer.
9. Continue to enter information as prompted.
10. At the screen Now, choose how to enter your sales, you probably want to select the option that will allows for manual entry.  
11. On the screen where you can enter your Altaba information, you will enter, among other things, your cost basis.  Your original cost basis has likely changed given the company's dissolution.  Thus, you may need to reduce your original cost basis as described in the previous post.  

Keep your documents evidencing Altaba's dissolution and how you arrived at your adjusted cost basis.  

@tlzhu 

We need to edit our previous response.  It appears that you may have nothing to report unless the distribution exceeds the basis in your Altaba stock.   Distributions of this type are a return of principal and until the distribution exceeds your basis, you have nothing to report.   Keep your records in order that you can accurately report your basis in the future should you sell your Altaba stock or there is a complete and final liquidation of the company.  

@tlzhu 

[Edited 3/31/2023 | 4:21pm PST]

[tlzhu]

Thanks a lot.