I sold all of a long term stock which split into two companies. How do I report?

[TomYoung]

There can be "nuances" of purported "stock splits" which can easily be overlooked but affect the correct reporting of a sale or sales.  It's always best to disclose the names of the stocks involved so that someone can provide a transaction-specific answer.

[mikea-mabe]

The stock is alcoa.  Last year it split into two companies, alcoa & arconic, and did a reverse split.  i sold it  all but not sure how to report

[TomYoung · Accepted solution]

This was a pretty straight-forward "split" made only slightly more complex by the reverse split.

Your original post only mentioned the "split" and asked "how do I report."  The answer to that direct question is you don't.  A split, in an of itself is not a reportable event. 

In your subsequent comment the real question emerged: "i sold it  all but not sure how to report"

You will receive two 1099-B's.

You'll enter the sales using the "Stocks, Mutual Funds, Bonds, Other" interview. 

Perhaps the two 1099-B's will report the correct basis for the two sales.  Whether they do or not depends very much on when and how you acquired the stock.  If the 1099-B's report the basis properly, you simply enter the sales exactly as they read.

If the two 1099-B don't report the basis you simply split the basis in your original purchase of Alcoa as:

Arconic

0.732566 x original basis in Alcoa

Alcoa

0.267434 x original basis in Alcoa

Your holding period for both stocks is exactly the same and depends on when you originally bought Alcoa.

In both cases you can simply say that you "bought" the stock you're selling - Arconic or Alcoa - and simply enter a total basis for the lot of stock according to the above calculations.

Tom Young

[GeoffreyG]

If you expect to receive a Form 1099-B (Proceeds from broker or barter exchange) from your stock broker or investment firm, then you should wait to make your Schedule D and Form 8949 data entries until you actually receive that document.

If you know in advance that you won't be getting a 1099-B for this particular stock sale(s), then you can safely divide your original cost basis between the (2) "new" companies, such that it exactly totals the cost basis in your (1) "old" company.  The company that completed the spin-off (or split) should, probably, have some information to this effect on their investors' webpage.

In any event, you technically should make (2) sale entries on your tax return to support this sale.  However, as long as you sold both "new" companies during the same holding period (long-term vs. short-term), then there really is no income tax difference at all as to how you report it, and it could done as a single entry.

Your actual determining factors, for figuring your capital gains (or losses) will be the original cost basis of your "old" stock (however you allocate it, or not, between your new shares) and your net proceeds from the sale(s).

Perhaps the following TurboTax webpage will be of some further assistance in understanding:

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/Guide-to-Schedule-D--Capital-Gains-and-...

As to how you mechanically begin the stock sales entry sub-interview in TurboTax, you can do the following:

1. Log into your TurboTax online account and begin your return.

2. Find the Search box in the upper portion of your screen, enter the search string "stock sales" and select the Jump To option that should appear.

3. This will take you to the stock sales initial interview and data entry screen

If you encounter any difficulties with the above, please feel free to contact us for help from a live agent:

https://support.turbotax.intuit.com/contact/

[Stevehofwa]

So I have CTVA, Dow, and DD, formed last April in a company split up.  Etrade reports this as a short term holding, but the original Dow stock was ancient.  Shouldn’t these still be considered long?

[MSCO9241]

there are two possibilities, the split resulted in taxable income for the new shares received. in that case the holding period starts anew.  in a tax-free split holding period tacks on.  contact e-trade. 

[Stevehofwa]

Thanks-the guidance from Dow etc said it should be a tax free event, so it must be an etrade issue.