1099-DIV box 9. How to report?

[aphillii8]

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?

[ethompson1234]

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.

[sapnhily]

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!

[sapnhily]

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!

[JohnB5677]

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.

[sapnhily]

If I reported the cash distribution on Box 9 of 1099DIV as sale on Schedule D, then the total proceeds on Schedule D would be different than the total proceeds on Schedule 1099-B as reported to the IRS by the brokerage.  Would this different in matching raise a flag for at least a letter audit from the IRS?  Please help!

[sapnhily]

It seems this is a wide spread concern for many users this year because of AABA.  I really think that Turbo Tax should address this issue directly with clear guidence.  I am getting a little disappointed because I don't think Turbo Tax is equipped to handle this issue!!!

[bkr9]

I am also frustrated as couldn't find clear guidance related to AABA cash distribution reporting and suspect might get an audit as Fidelity is reporting income w/o cash basis which can be different if we enter cost basis. Any knows how to handle this?

[DaveF1006]

At his point, you would need to leave the basis blank or research historical stock prices for ABBA. There are websites that you can use to obtain this information. i would use several just so you can get a consensus. Make sure you record where/how you received basis information just in case if you are subject to an audit. Documentation is everything.

[Mike20201]

Just wanted to know if you got a clear answer already.  The last person at Turbo Tax I've talked told me not to worry about it until liquidation is complete.  But IRS pub 550 is not clear.  It gave two scenarios.  If you have realized a gain from cash liquidation  it should be reported as capital gain but in the same paragraph it mentioned about complete liquidation.  Since I met the first scenario (realized a gain) I will report it even if it is not completed yet but it will be a red flag to IRS since the documentation is not matching with the data if I input the gain since the 1099 B does not have it. Can you please share what your research results are.  Thanks

[sapnhily]

After reading the IRS Pub 550, I come to similar conclusion as your.  If the Cash Liquidation Distribution resulted a gain, then you need to report the gain now, even the distribution is not final.  And, you should not report any capital loss until the distribution is finalized.

Regarding to the 1099-B matching, after you edited all your offio1099-B, there’s an option for you to add another sale “not reported” on 1099-B.  I believe that this would alert the IRS system only match the total proceeds from reported 1099-B to the total proceeds on your tax return “excluding” the sale item specified as “not reported” on 1099-B.

I would not concern a IRS red flag since you are reporting a gain.  The worst thing it could happen is you would receive a letter audit stating that “you over stated your capital gains and therefore you are entitled additional refunds!”!?!?

[JamesG1]

Form 1099-Div liquidating distributions reduce your basis in the investment.  See IRS publication 550, page 21 Liquidating Distributions

"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."

[mcov1]

I also have the same issue with a total liquidation of an ETF reported as a Cash Liquid Distribution on line 9 of my 1099 DIV. I recognize that Turbo Tax isn't calculating a Tax for this. Also, I received a message that Turbo Tax would handle this later, but it never came up. The transaction did not appear on my 1099-B; however I do have the cost basis which is less than the cash distribution suggesting a long-term capital gain and possibly a tax liability. I don't see any article in this thread or info in PUB 550 that clearly resolves or answers these questions - how does one handle a total cash liquid distribution reported on a 1099-DIV (Not a 1099-B) that has a cost basis less than the cash distribution? Forget about it or report is as if one had a 1099B?

[DaveF1006]

Please review this Turbo Tax link for instructions on how to report a liquidating dividend. in your case, 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 $400 and the company is totally liquidated, then if you receive a 1099-DIV with Box 8 showing $1000 and you received nothing else from the liquidation. This then becomes your capital gain for the liquidating dividend. Make sure all the other steps have been performed before you report this as a stock sale.

[Mike20201]

Thank you.  I have filed my return few days ago.  I am glad your interpretation is same as mine,  that it has to be disclosed now in 2019 because the cost have been recovered and with a gain. The complete liquidation only apply when you have losses.  You have to wait for the final liquidation.  However for me the event of recovering my cost happened in the first distribution so I have to disclose it. I did the research and AABA will have a second distribution in late 2020 and final distribution is estimated to be in 2022.  The concern I have about not matching up was taken cared of exactly with what you suggested.  When I did my 8949 (F) was marked not reported on Form 1099-B.  However, my description was "AABA liquidation reported in 1099 DIV box 9)".  Hopefully, this is what IRS intention with liquidation distribution. pub 550.  Thanks

Also, I am not sure if software address this issue I have tried two different tax preparation and it really does not transfer over.  It does not even ask for cost of purchase.