How to handle altabba(AABA) cash distribution in turbo tax?

[LinaJ2020]

Very likely you would report it as a 1099-DIV.   See post from TaxNoob18 from above.

To enter a Form 1099-DIV, here are the steps:

In TurboTax online,

• Sign in to your TurboTax account and select Pick up where you left off
• At the right upper corner, in the search box, type in "1099div" and Enter
• Select Jump to 1099div
• Follow prompts

@albertpet

[Anonymous]

Hi, Has anyone figured out how to report this? Do we ignore it for now and use the adjusted cost basis when the final distribution is made?

[JamesG1]

See IRS publication 550, page 21

Liquidating Distributions

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. These distributions are, at least in part, one form of a return of capital. They may be paid in one or more installments. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9.

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain. Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock.

Stock acquired at different times.

If you acquired stock in the same corporation in more than one transaction, you own more than one block of stock in the corporation. If you receive distributions from the corporation in complete liquidation, you must divide the distribution among the blocks of stock you own in the following proportion: the number of shares in that block over the total number of shares you own. Divide distributions in partial liquidation among that part of the stock redeemed in the partial liquidation. After the basis of a block of stock is reduced to zero, you must report the part of any later distribution for that block as a capital gain.

Distributions less than basis.

If the total liquidating distributions you receive are less than the basis of your stock, you may have a capital loss. You can report a capital loss only after you have received the final distribution in liquidation that results in the redemption or cancellation of the stock. Whether you report the loss as a long-term or short-term capital loss depends on how long you held the stock.

[Anonymous]

Thanks, how do we handle partial distributions? Do we wait till the final distribution is made? 

[gbern]

Not sure where I printed it from, but was in Turbo Tax explanation regarding "Liquidation Distributions":

"When a corporation, ....undergoes a partial or or complete liquidation, you may get a cash ...distribution.  An amount designated as a cash....distribution is often not taxable, but instead reduces your basis in the stock you own.  If a cancellation of stock occurs from a liquidation, a loss can be claimed the year the final distribution is received if total distributions are less than the basis.

When you sell the stock, your cost basis for figuring gain or loss is reduced by any distributions you received.

However, in the following cases the distribution is taxable and you need to report the distribution as a liquidation sale in the Investment Income section of TurboTax:

- Your cost basis in the stock is zero.

-Your cost basis is less than the distribution amount.  (This is my case as bought it long time ago. So I will be showing Capital Gain for 2019 year.  

-This liquidation is a final distribution from the company."  (And assume another Capital Gain when they give the final distribution next year???)

[tremorchrist]

Reading various posts on this forums about stock liquidation and AABA, I've figured out how I should report them to IRS. I've both RSUs and stock obtained thru ESPP. Reporting  RSUs is straightforward -- I know my vesting dates, and so I've been able to find the FMV on those dates for cost basis. I also figured out my cost basis for ESPP, and what the 'bargain' factor is. The only trouble I'm having right now is that TurboTax isn't allowing me to enter that bargain factor without a W2, either from  Yahoo!/Verizon or Altaba, because that amount is well over $2k. I contacted Verizon and they said Altaba should issue the W2. I guess that makes sense because it's AABA after all that I held and got liquidated. I contacted Altaba Inc. via email a couple of days ago but have yet to hear back. If they don't respond, or say they don't/won't provide a W2, I'm not sure what to do here.

So:

- Is one required to report the bargain element of ESPP? I think yes, even if it's a (partial) liquidation and not a sale.

- Can it be reported without a W2? TurboTax says no, at least when it's above $2k.

- If a W2 is required, has anyone got one from Altaba?

All I need is a W2 and then I'm thru!

-TC

[TaxNoob18]

I contacted them and was informed that there will be another distribution this year of unknown amount. The question is, how would we know when the final liquidation will be distributed?

[DianeW777]

You won't know positively until you receive it or by contacting the organization handling the liquidation. The following information can be found by using Google.

• Altaba has said it plans to make a second distribution in the fourth quarter of 2020. A final distribution or distributions are expected at a later date, which analysts have estimated could be in 2022.
• The company also has an FAQ site.

Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. These distributions are, at least in part, one form of a return of capital. They may be paid in one or more installments. You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 and/or 9.

Any liquidating distribution you receive is not taxable to you until you have recovered the basis of your stock. After the basis of your stock has been reduced to zero, you must report the liquidating distribution as a capital gain. Whether you report the gain as a long-term or short-term capital gain depends on how long you have held the stock.

[TaxNoob18]

Thanks but I already read that information in 2020 when preparing my 2019 tax year.

[Tauepsilon1920]

My  AABA cost basis is more than the first liquidation distribution amount in 2019.  I didn’t know, but  I already entered that basis in last year’s return and claimed it as a loss.  

Does that mean the 2nd liquidation amount from  2020 and any future distribution would all be capital gains with a basis of zero, right?

thanks

[Hal_Al]

Q.  Does that mean the 2nd liquidation amount from  2020 and any future distribution would all be capital gains with a basis of zero, right?

A. Yes.

@Tauepsilon1920  said "My  AABA cost basis is more than the first liquidation distribution amount in 2019.  I didn’t know, but  I already entered that basis in last year’s return and claimed it as a loss.

You don't usually claim losses from a liquidating distribution.  It's either a reduction in your cost basis or a capital gain (after the basis has been reduced to zero). 

[Tauepsilon1920]

Thank you for the response.  Where do I go in TurboTax to enter the zero basis?  It tells me to go to the investment section under  wages & income section, but I still couldn’t find where I can enter that info

[Hal_Al]

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Investment Income

   -Stocks, mutual funds, Bonds, Other (Real estate is other)

Answer no, when asked if you got a 1099-B. then follow the interview.

[Tauepsilon1920]

If I selected no, would I still be able to enter my 1099-B information on my other investments?

[Hal_Al]

Yes. But, I find the  TT interview goes better if you enter the 1099-B sales before you enter the ones not on a 1099-B