topic Re: Margin Interest Expense - Investment Expense in Get your taxes done using TurboTax

1099-DIV box 9. How to report?

John_TT — Sat, 01 Jun 2019 06:39:47 GMT

1099-DIV box 8 and 9. I have a 1099-DIV with cash liquid distribution (Box 😎 from inheritance and also non-cash distribution (Box 9). How and where do I report the Box 9? Is the fair market value of it considered interest?

There's a tiny box that needs to be checked on the 1099-D...

MichaelDC — Sat, 01 Jun 2019 06:39:49 GMT

There's a tiny box that needs to be checked on the 1099-DIV screen. (See the attached screenshot below. Click to enlarge.)

First, how to get there; then a little info below on why Box 8 and 9 is usually not taxable.

1. With your tax return open, search for 1099-DIV or 1099DIV (lower-case works also) and then click or tap the "Jump to" link in your search results.

2. Answer Yes to Did you receive any dividend income?

3. Choose your bank or brokerage from the list to import your 1099-DIV and click/tap Continue or manually enter your 1099-DIV by clicking/tapping I'll type it in myself.

4. Follow the on screen instructions to enter your 1099-DIV.

Don't combine the amounts from 2 or more 1099-DIV forms if they're from the same payer. Instead, enter additional 1099-DIVs individually by answering Yes to Do you have any more dividend income from somewhere else which appears a few screens down the road.

If you are entering a second 1099-DIV, simply click/tap on Add Another Broker or Payer and follow the same steps above.

You may not need to report this income, however fill in the 1099-DIV as written on the form.

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.

If it was a partial liquidation, there is nothing to report on your tax return. You adjust the cost basis of your stock or mutual fund by the amount of the partial liquidation shown in Box 8 or Box 9, then when you eventually sell the stock you will use the lowered cost basis as the purchase price of the stock.

If the liquidating distribution shown in Box 8 or 9 is a complete liquidation, then report the amount in Box 8 or 9 on the stock sale screen as a stock sale. For example, if your cost basis in stock in a company is $1,000 and the company is totally liquidated, then if you receive a 1099-DIV with Box 8 showing $400 and you received nothing else from the liquidation, then you would report the stock as a sale on the stock sale screen and report $400 as the sales price and $1,000 as the cost basis in the stock that was completely liquidated.

See http://www.irs.gov/publications/p550/ch01.html#en_US_2014_publink100010095

I understand how to report the Box 8 (cash liquidations d...

John_TT — Sat, 01 Jun 2019 06:39:50 GMT

I understand how to report the Box 8 (cash liquidations distributions), but how do I handle the amount in Box 9 (Noncash liquidation distributions)?

Thanks for the follow-up. Let me know if this helps and I...

MichaelDC — Sat, 01 Jun 2019 06:39:52 GMT

Thanks for the follow-up. Let me know if this helps and I'll add it to the answer.
If it was a partial liquidation, there is nothing to report on your tax return. You adjust the cost basis of your stock or mutual fund by the amount of the partial liquidation shown in Box 8 or Box 9, then when you eventually sell the stock you will use the lowered cost basis as the purchase price of the stock.

If the liquidating distribution shown in Box 8 or 9 is a complete liquidation, then report the amount in Box 8 or 9 on the stock sale screen as a stock sale. For example, if your cost basis in stock in a company is $1,000 and the company is totally liquidated, then if you receive a 1099-DIV with Box 8 showing $400 and you received nothing else from the liquidation, then you would report the stock as a sale on the stock sale screen and report $400 as the sales price and $1,000 as the cost basis in the stock that was completely liquidated.

It was a total liquidation of an estate. I understand ho...

John_TT — Sat, 01 Jun 2019 06:39:54 GMT

It was a total liquidation of an estate. I understand how to report my gain on Schedule D for the cash liquidation distribution. However, there is ALSO a small amount shown in Box 9, Noncash liquidation distribution. I'm trying to find out what that "noncash" is for, maybe it is for some equipment that wasn't liquidated. So how do I handle/report the amount shown in Box 9?

After entering the 1099-DIV, TurboTax should direct you t...

MichaelDC — Sat, 01 Jun 2019 06:39:55 GMT

After entering the 1099-DIV, TurboTax should direct you to the "Investment Income" section. You can enter it as "Other" and indicate it was "inherited". Unfortunately, you'll need to contact the issuer of the executor and find out exactly what the item was and the FMV on date of death. Did you receive something non-cash that you can remember?

Not that I can remember. I'm waiting for response from t...

John_TT — Sat, 01 Jun 2019 06:39:56 GMT

Not that I can remember. I'm waiting for response from the accountant as to what that non-cash amount is for. I don't have a closing or year-end statement from the corp.-estate for 2016 yet. Thanks for the "Other" suggestion.

You're more than welcome.Good luck.

MichaelDC — Sat, 01 Jun 2019 06:39:58 GMT

You're more than welcome.Good luck.

I wish this answer (and the material in IRS Pub 550) cove...

taxaskerpa — Sat, 01 Jun 2019 06:40:00 GMT

I wish this answer (and the material in IRS Pub 550) covered a liquidated money market fund instead of a liquidated corporation, in my case Schwab PA muni fund SWEXX that liquidated in 2017. The two situations are similar but not identical. My basis in the fund is my initial investment, plus monthly interest payments that were reinvested in the fund over the years. I can't figure out if any portion of the amount in Box 8, Cash Liquidation Distributions, should be reported on Sch D. Or maybe I need to report my entire balance in the fund at the liquidation date as a "sale", with an identical basis, and net gain of zero? There is nothing in Box 2a Total Capital Gain Distributions, and Schwab did not issue me a 1099-B for stock sales, only a 1099-DIV. Also, a separate and much smaller amount is indicated on my 1099-DIV as STCG attributable to the liquidation of this fund, and is included in Box 1a Total Ordinary Dividends. Should this smaller amount be reported on Sch D? Thank you.

Re: 1099-DIV box 9. How to report?

Rabbit — Thu, 20 Feb 2020 22:51:36 GMT

I just received my 1099-DIV statement. In Box 9 Cash Liquidation Distribution there is a amount of $51,500.00. I don't know if it was a partial or total liquidation. Do I have to report this and if so, how, on my income tax? When I transfer over my normal distributions from my account to my Turbo Tax this cash distribution does not transfer over.

Re: Not that I can remember. I'm waiting for response from t...

JohnB5677 — Fri, 21 Feb 2020 00:19:26 GMT

A liquidating distribution is not taxable until you recover the basis of your stock. After that 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.

You have posted the 1099-DIV correctly. If this is the final liquidation you can determine if you've had a gain ir a loss. If it is not a final liquidation and you have not exceeded what you paid for the stock you don't have to report anything further.

Re: Not that I can remember. I'm waiting for response from t...

Rabbit — Fri, 21 Feb 2020 16:57:12 GMT

Thank you for your response. However, I double checked with my broker & they don't know whether it is a partial or final distribution or not. It's from a very old stock that was taken over a long time ago & now it is holding company. No one seems to have any records on it.

Re: Not that I can remember. I'm waiting for response from t...

Rabbit — Fri, 21 Feb 2020 19:05:54 GMT

I just received a phone call from my broker, after he researched, he confirmed that the amount of $51,500. was a partial distribution. So if my cost basis was $40,000. even though the $51,500. was a partial distribution, do I have to file capital gains on the $11,500. this year or do I wait until we get the balance of the distribution, which will be paid at the end of 2020.

Re: Not that I can remember. I'm waiting for response from t...

TaxNoob18 — Sat, 22 Feb 2020 05:19:45 GMT

Sounds like you own 1000 shares of Altaba. Their initial distribution is $51.50 in 2019. Check this: https://www.irs.gov/publications/p550

specifically this section "Liquidating Distributions"

I am no expert but I think you have to report your 2019 capital gain now. I'm in the same situation but my initial distribution is several thousand below my cost basis. It is a loss. I must wait until final distribution before filing capital loss.

Re: Not that I can remember. I'm waiting for response from t...

ethompson1234 — Sat, 22 Feb 2020 14:24:40 GMT

I owned Altaba as well. Does anyone know if / when there will be a final distribution? I read that the reason why it was partial (~75%) was because they reserved the rest for tax reasons. It was essentially a holding company for Alibaba stock, a Chinese company. They were not sure if there would be tax implications for liquidating the stock. I would like to know if we will ever receive the remainder. In my case, I bought the Yahoo stock back in 2013, so I'll be paying capital gains.

Re: Not that I can remember. I'm waiting for response from t...

aphillii8 — Sat, 22 Feb 2020 15:45:15 GMT

I also have a cash liquidation distribution related to Altaba. In my case, the distribution is greater than the basis so I need to report it but can't see how to do that in TurboTax. The TurboTax section that shows the import of my 1099-DIV from my brokerage account has a page that says they will handle the cash liquidation distribution later in the Investment Income section but the topic never came up when I went through that section. I went back into the Investment Income section but see no easy way to do it as the whole section is based off of 1099-B and 8949 form input. Does anyone know how to enter this in TurboTax?

Re: Not that I can remember. I'm waiting for response from t...

ethompson1234 — Sat, 22 Feb 2020 17:24:34 GMT

I had the same issue, where the distribution showed up on my 1099-DIV in Box 9. I received a similar message that it would handle it later, but went through the rest of the filing process and it didn't come up again. I was able to back track and enter it manually as a capital gain. I don't think you need a 1099-B to enter a capital gain. As long as you know the distribution amount (Box 9), cost basis and the respective dates, then you should be able to claim it. For me the distribution date was 9/27/2019. I bought the stock as Yahoo in early 2013, so made a tidy profit. I've heard that the remaining distribution should occur sometime this year, we'll see.

Re: Line 9 Cash Liquidation Distribution on the 1099-D...

sapnhily — Wed, 26 Feb 2020 19:50:57 GMT

If I mannually report the Cash Liquidation Distribution on Shedule D as Sales, then the total Proceed on bottom of Schedule D would be diffent than the total Proceed as reported on broker's 1099-B. Would this difference create a matching problem with the IRS between the Total Proceed showed on Schedule D and Total Proceed as reported on 1099-B. Thank you for any insight!

Re: Margin Interest Expense - Investment Expense

sapnhily — Wed, 26 Feb 2020 19:59:06 GMT

In my 1998 1040 Tax Return, I had the option either to add the Margin Interest Expent to Schedule A as addtional itemized deduction, or elected the Margin Interest Expense to offset most of my Ordinary Dividends. For some reasons, I can't do that in Turbo tax for my 1999 1040 Tax Return. Greatly appreciated for any help and instruction!

Re: Margin Interest Expense - Investment Expense

JohnB5677 — Fri, 28 Feb 2020 00:34:37 GMT

As of 2000 the law provided "You may deduct interest paid on margin accounts as investment interest. The interest must have been incurred in connection with the acquisition or carrying of taxable securities. Generally, the deduction for investment interest is limited to the amount of your net investment income. " But I would have no idea how to post it.