1099-DIV box 9. How to report?

[Pepperminty20]

Hello, my situation is slightly different than those mentioned in this thread. My REIT investment has not reached final liquidation yet, it's being liquidated over the last few years, with final liquidation expected this year 2020. I was told that since they haven't fully distributed the original principle yet, there are no capital gains to report. The 1099-DIV only has an amount listed in box 9, which I recorded on my 2019 tax return when entering the investment data under Income. Do I need to enter anything anywhere else at this point? Thank you!  

[DaveF1006]

When a corporation, bank, or credit union undergoes a partial or complete liquidation, you may get a cash or noncash liquidation distribution. An amount designated as a cash or noncash distribution is often not taxable, but instead reduces your basis in the stock you own. If a cancellation of stock occurs from a liquidation, a loss can be claimed the year the final distribution is received if total distributions are less than the basis.

When you sell the stock, your cost basis for figuring gain or loss is reduced by any distributions you received.

However, in the following cases the distribution is taxable and you need to report the distribution as a liquidation sale in the Investment Income section of TurboTax:
 - Your cost basis in the stock is zero.
 - Your cost basis is less than the distribution amount.
 - This liquidation is a final distribution from the company.

You would not need to report this unless this is the final distribution or if the cost basis is less than the distribution amount.

[ElliG]

Thanks for your answers so far. They've helped me determine that I have to report a capital gain from a paritial liquidation of stock that was higher than my cost basis. Now I'm trying to figure out where to report it when I don't have a 1099-B.
When I answer "yes" to "Did you sell stocks, mutual funds, bonds, or other investments in 2019?" and in the next screen select the "Stocks, Bonds, Mutual Funds" option, TurboTax only gives me the option to enter a 1099-B (the next question is "Which bank or brokerage sent you a 1099-B for these sales?", not whether I have a 1099-B). I still technically hold the stock and am entitled to future distributions from liquidation, so it doesn't seem like the brokerage is going to provide a 1099-B for the sale of the stock. Is there an alternative place to enter this capital gain? 

[DianeC958]

You need to enter the information in the section for Stocks, Mutual Funds, Bonds, Other.

The first question TurboTax asks when you are adding sales in this section is Did you get a 1099-B or a brokerage statement for these sales?  Once you answer this question No, then you will see a screen with a list of the type of investment you sold. Pick Stock, then the program goes on to ask you information about the sale.

Guide to Schedule D: Capital Gains and Losses

@ElliG

[ElliG]

Thanks @DianeC958 for the quick response. The problem is I don't get that question - the flow jumps directly from the question whether I sold stocks / bonds to asking me to enter the information for the 1099-B, without asking me if I actually got the form. Do you know if TurobTax changed the flow? I'm using the self-employed version. 

[DianeC958]

In walking through the program today, it has been changed from asking you if you received a 1099-B.  The first screen asks is you sold Stock, Mutual Funds, Bonds, or you click on Other.

Here you want to click on Other, since you did not receive a 1099-B for this sale.  Then you can add the information you have about the sale.

@ElliG

[Mike20201]

To comply with IRS rule and be transparent about it.  The system revision should be.

1.  Did you receive a 1099-B?

2. Is this a complete liquidation?

3.  Cost of Investment and liquidation Proceed.

4.  Then difference (lost or gain) should transfer to Form 1040.

Although I believe the question "did you receive 1099B" is irrelevant" because cash and non cash liquidation is already reported in 1099-Div.

Just my opinion from a taxpayer not an expert.

[fsaracev]

Your steps helped me enter information into TurbotTax but it appears TurboTax is not covering my specific use case.

I lived and worked in Germany entire 2019. Based on USA - German treaty, I will need to pay all my dividend/stock gains in Germany. If that is a case, TurboTax can not understand this manual entry and right now, I would need to pay USA taxes too. Prior entering cash liquidation distributions, my USA federal tax obligation was $0. Any suggestions/advice how to indicate that I will be paying German tax for cash liquidation distributions? I hope this would not mean that I need to pay taxes for cash liquidation distributions in both USA and Germany.

[ThomasM125]

If you received a form 1099 reporting the income but it is not taxable in the United States, the you should enter the income on your return, but then put a negative entry for the amount of the income in the "Other Income" section on your tax return, along with an explanation as follows:

1. Go to the "Federal" section of TurboTax

2. Click on "Income and Expenses"

3. Find "Less Common Income" and choose the last entry "Miscellaneous Income"

4. On the next screen, "Miscellaneous Income" choose the last entry "Other Reportable Income"

5. Enter a description for your entry (Tax Treaty, [Code #]), and enter the taxable amount you want to exclude from income as a negative number

[geobrick]

OK, it seems clear that even a partial liquidation (as in AABA) should be reported as a capital gain if the distribution is more than the cost basis (essentially it's a return on capital that exceeded the original basis.

What no one has made clear yet is where to enter this in TurboTax. It's not a stock sale. We still hold the stock and it doesn't appear on our 1099-B. There must be a section in TurboTax where we can enter a return on capital that results in a capital gain. What section is that? I don't believe entering it as a stock sale is the correct way to do it. There must be a better section for these kinds of things.

[ThomasM125]

You can enter it as a sale of an investment as follows:

1. Find the "Income and Expenses" menu option in your TurboTax program

2. Find "Investment Income" in the list of categories

3. Click on "Stocks, Mutual Funds, Bonds and Other"

4. Work through the program to find "Choose the type of Investment you Sold"

5. Choose the "Everything Else" option in the list of investments

6. Enter the information requested about your sale (date purchased, sale amount, cost, etc)

[ktranflodine]

I have the same problem.  

[geobrick]

Just to update this for 2020 and 2021 taxes, ALTABA issued an additional liquidation of $8.33/share this year (my 1099 from etrade called it a "Return of Principal). This should be handled in a similar way as last year's $51.50 distribution (it reduces your basis until your basis hits $0 then everything beyond that becomes a reportable capital gain). Also note, you still hold the AABAESC shares in escrow and they have an estimated value of about $14.xx. Those are still real and we should be getting one last payment.

The ALTABA website FAQ says: "Stock certificates are not required to be surrendered as part of Altaba’s liquidation and dissolution. Upon the payment of the final liquidating distribution, Altaba will issue a press release to the effect that all outstanding shares will be deemed to be cancelled. Therefore, there will be no collection or surrendering of stock certificates.". 

This is from an email I received from ALTABA on 3/10/2021:

"The shares are currently an escrow security that represents rights to future distributions. Altaba intends to make an additional distribution following the receipt of the final court order from Delaware Chancery Court. For the additional distribution, Altaba intends to distribute Altaba’s remaining assets in excess of the amount to be used by Altaba to pay claims and fund the reserves required by the Court Order and pay Altaba’s operating expenses through the completion of the dissolution.  Altaba does not know when it will receive the final court order, but it will likely occur sometime after the April 20-22, 2021 Court hearing.  Altaba cannot guarantee the amount of any future distributions."

Hope this update helps.

[TaxNoob18]

Did you report it last year and this year? Is yours a gain or loss so far?

I did not report it last year and I believe I still don't have to report it this year because the total distribution is still below my cost basis.

[Frank_Dania]

Thanks for the answer, but where is  "the attached screenshot below. Click to enlarge" ?

Frank_dania