Cash Liquidation Distribution - Liquidated ETF

[Anonymous]

TurboTax does not handle Cash Liquidation Distributions correctly but rather processes these as if they were correct. Here is my particular circumstance. I received a Form 1099-DIV that showed box 9 Cash Liquidation Distribution with the amount when liquidated (5,560). This distribution represents an ETF that I owned that liquidated (in full).  Form 1099B reports the ETF as “expired” and shows the cost basis (5,727) but no proceeds. It shows a loss in the amount of the cost basis (5,727) which is incorrect as it is not taking into account the proceeds/cash distribution. It processes as if my loss was $5,727. This is good for me but not accurate. 

When I enter the information on DIV and 1009- B as received as requested into Turbo Tax I received the following message: We will handle your cash liquidation later.

The software never handled it later. It also never flagged this as an error upon checking to make sure my taxes were correct. This is not the proper handling of this tax situation. If I adjust the proceeds then what I have entered into TurboTax will no longer match my 1099-B. Does this matter?
Turbo Tax says that they guarantee 100% accuracy but this is a major software bug. What is the best way to handle?

[TomYoung]

Since the beginning of time - it seems like - this condition and the same erroneous message has existed in TurboTax.  I've seen dozens of these sort of posts over the years.

If the basis reported on the 1099-B is correct simply enter the amount of the liquidation distribution into "proceeds", as that's the correct handling of the situation.  The IRS will never make a peep about the "discrepancy" in proceeds.

[ALB545]

We have a 1099 DIV box 9 cash liquidation distribution.  We have not determined a way to get this information to the 8949 then to schedule D for the capital gains

[email address removed]

[Mike9241]

LIQUIDATION DISTRIBUTIONS

Liquidation distributions, reported on Form 1099-DIV, are distributed when a corporation in which you own stock is going through a partial or complete liquidation. They may be received in the form of cash or noncash. An amount designated as a cash or noncash distribution is often not taxable, but is a reduction of your basis in the stock.

So when you dispose of the stock, your basis for figuring gain or loss is reduced by the amount in this box. (It will result in a larger gain or a smaller loss when you dispose of the stock.)

However, if the basis of your stock is already zero, or is less than the amount shown in this box, the amount is taxable and you need to report the amount that exceeds the basis in your stock as either a long-term or a short-term capital gain.

If this liquidation is a final distribution from the company, you need to report a sale of the stock on Schedule D.

in other words there is no auto transfer to form 8949

did you also get a 1099-B that may have reported the same amount?  

anyway you treat the amount as a sale of a stock. the only question is cost basis ti use.

if final distribution you would report gain or loss depending on your tax basis. if a partial distribution you would use the lesser of your remaining tax basis or the amount of the distribution

not sure what version of TT you are using. some don't support the reporting of capital gains

if not you'll have to upgrade 

otherwise

Click on Federal Taxes 
Click on Wages and Income 
Click on I'll choose what I work on (if shown)
Under Investment Income
On Stocks, Mutual Funds, Bonds, Other, click the start or update button

[ALB545]

This worked.  We only received a 1099 DIV with box 9 filled.   

Thank you