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Anonymous
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Cash Liquidation Distribution - Liquidated ETF

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?

 

1 Reply
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Level 12

Cash Liquidation Distribution - Liquidated ETF

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.