"Return of capital for fractional shares or cash in lieu" missing in drop-down

[mstruzak]

The "Learn more" link by the question "How did you receive this investment?" on the "Review <name-of-brokerage> sale" shows "Return of capital for fractional shares or cash in lieu" & explains when to use it, which is my exact situation, but the drop down does not list it as an option.  Is this a bug & will it be fixed?  

In case it is not going to be addressed in time for Apr-15, here a little background. This event was in result of the acquisition of Vmware by Broadcom, with Vmware shares coming from the 2021 spinoff from Dell, with original Dell RSUs. I entered "Stock (non-employee)" for type of investment and "I putrchased it" for how I received it; I used 11/24/2023 for the date acquired (1b on my 1099-B) and 11/27/2023 for date sold or disposed (1c on my 1099-B)--just following instructions in TT to match the 1099-B exactly.

But my statement has a page with "SUPPLEMENTAL INFORMATION", where each lot has an acquisition date corresponding to the original Dell RSU vesting events, all earlier than a year prior. I therefore checked "I need to correct the holding period reported on my 1099-B", which updated holding period to "Long-term (Box E)". Does that all sound kosher?

Also, "SUPPLEMENTAL INFORMATION" lists all the lots as RSUs--should I use that instead of "Stock (non-employee)"? My reasoning was that I never received Vmware RSUs and assumed the classification did not carry through the spin-off, by which time my Dell positions were all actual shares. Sounds correct?

[DianeW777 · Accepted solution]

You are correct.  The fractional shares with 'cash in lieu' is the right scenario for reporting this investment transaction. For the description 'cash in lieu' is not a selection as you indicated.  I'm not sure it will be since it is technically stock regardless of what terms are used.

How to Report Cash in Lieu of Fractional Shares

1. The IRS considers cash for a fractional share to be money received as the result of a stock sale.
2. This transaction must be reported on IRS tax form Schedule D Capital Gains and Losses. 
3. The date of the sale (when cash was received) and the date of the original stock purchase is needed to complete the tax form.

Tax Basis Example:  Assume a shareholder has an aggregate $100 basis in 50 shares of ABC stock ($2 per share), and the fair market value of one share of ABC stock is $66.65. Following the ABC Merger, the shareholder should have an aggregate $100 basis in 64.1 shares of ABC stock (50 shares x 1.2820, or $1.56 per share), and should be treated as having sold 0.1 shares of ABC stock with a tax basis of $0.156 ($1.56 x 0.1 shares) for $6.67 ($66.65 per share fair market value x 0.1 fractional shares).

Once you have your information you will complete the entry in TurboTax using the following steps.

1. Open (continue) your return if it isn't already open.
2. In TurboTax, search (upper right) > Type 1099b  Press enter > then select the Jump to link 
3. Answer Yes to Did you sell stocks, mutual funds, bonds, or other investments in 2023?
   • If you see Here's the info we have for these investment sales, select Add More Sales.
4. Continue to answer the questions and your assessment and selection does sound correct and will still create the proper end result for your tax return.