Reverse split stock - exchange & cash in lieu transactions

[Khan10]

Hi,

I purchased 60 for $16/share and 50 shares for $8/share on two different dates 02/21 and 03/21 respectively, So total cost basis is $1410 then fast forward to 08/01/23 the reverse stock split happened and see two transactions.

exchange -50 amount 0

cash in lieu $12.40

When I received the form 1099-B it was reported cash in lieu only with no loss but I actual have a loss.

Cash/Lieu 08/01/23  12.40 N/A

How would I report it as a loss?

[DavidD66]

It sounds like it wasn't reported on your 1099-B as a transaction.  You enter it the same way you would enter other stock transactions.  You will select Sales Section "Long-term did not receive 1099-B form".  If it was reported as a transaction on your 1099-B, you would indicate on the entry screen that "The cost basis is incorrect or missing on my 1099-B".   If you imported your 1099-B and it's not included in your transactions, you will need to add it.  To do so:

• From your investment sales summary, click on Review next to your broker or service 
• Click on Add another sale
• Enter the information for you cash in lieu transaction 

[Khan10]

It is reported in the 1099-B under OTHER TRANSACTIONS - Cost basis not reported to IRS - Form 8949, (X) section.

What would be the cost basis and proceeds? As mentioned, Cash/Lieu proceed12.40 and N/A on the cost basis. Usually, on the other transaction reported to the IRS, they have a Sale with that proceeds and cost basis with the Date acquired & sold.

I'm still not clear why my actual cost basis $1410 is not mentioned 

[DaveF1006]

To clarify, what were the terms of the merger? In the reverse stock split, what did the 110 shares of stock get reduced to after the split?

[Khan10]

This was the terms - https://investors.view.com/news-releases/news-release-details/view-inc-completes-rev[product key rem...

These are the transactions that occurred after the reverse split.

Exchange VIEW INC CL A PAY DATE 07/26/2023

[PII Removed]

$0.00

Cash In Lieu of Shares VIEW INC REG SHS CL A FORM 1099-B SUBSTITUTE PAY DATE 07/26/2023

VIEW

$12.40

So, how will these be reported as a loss?

[DavidD66 · Accepted solution]

After reviewing the details of the reverse split, it's pretty clear.  The reverse split was 60 for 1, and no fractional shares issued.  You had 110 shares, so you should have received 1 share after the split.  That is for 60 of your shares, which I will assume were the first lot of 60 shares.  That left 50 pre-split shares, which isn't enough for full share of the after split stock, so you received $12.40 for your 50 shares with a total cost basis of $400.  You report a stock transaction sale with a cost basis of $400 and proceeds of $12 for a long term loss of $388.  See my original answer above for how to enter it in TurboTax.  Note - your broker may have assigned the cost basis differently.  Take your total original cost basis less the cost basis they assigned to the new 1 share and subtract that from you combined cost basis and that is the amount to use as the cost for your transaction.   

[Khan10]

Thanks David. That makes much more sense.