Some stocks in my portfolio had a reverse split & cash in lieu of fractional shares were paid. 1099B shows cost as N/A for these, should I enter cost =0 for these in TT?

[TomYoung]

You can enter a basis figure if you wish. 

Example: You own 227 shares with a basis of $5,000.  The stock does a reverse 1 for 3 split so you "receive" 75.67 shares.  But your basis is unaffected. 

$5,000 / 75.67 = $66.076 and that's your basis in the entire amount of shares that were due to you because of the reverse split.  But the fractional share gets purchased from you with the cash in lieu. 

$66.076 x .67 shares = $44.27 and that's the basis you deduct from the cash in lieu to determine profit of loss.

Or, you can enter $0 here and pay taxes on the entire amount of the cash in lieu.

Tom Young

[soumyadas1977]

I'd bought 100 shares of CHK and after reverse split in April 2020 (reverse stock split, at a ratio of 1-for-200) I'd 0 shares and got cash in liue of fractional shares. The 1099 B from the broker shows cost basis as 0. I'm wonderinfg this is incorrect and the original purchase price of 100 shares is the cost basis. Is this right?

[NCperson]

@soumyadas1977 - you didn't provide enough information to answer your question. but assuming there were no other lots. the cost basis PER SHARE would be the same as the cost basis PER SHARE AFTER THE SPLIT

remember the tax is only 15% (long term) so if the cash was $20 and the cost basis is entered as zero, the tax is $3!  

[soumyadas1977]

I paid $551 for the 100 shares. And after the 200-to-1 reverse split, I got cash-in-lieu and total proceeds is $7.36. The cost basis shown in 1099B is actually NA (I incorrectly said it is 0). So my questions is how do I capture the capital loss (551-7.36)

[NCperson]

if there was a 200 reverse split, you now have an investment of $551 and .5. shares.  that .5 shares was paid in cash as it was less than 1 share, so the cost basis should be $551 and the proceeds is 7.36. 

change the n/a to $551and you should see the capital loss.  you can enter it under stock / schedule D. 

[soumyadas1977]

Thanks NCperson. That's exactly what I did and  entered $551 as my cost basis. 

I called TT help to see if this is okay and was told that it may be a problem as brokerage reported info will not match mine.

Then I asked if I need to file form 8937 to provide an explanation of the cost basis. TT help was initially saying I can attach a form before efiling but when I asked for instructions, I learnt that TT does not support 8937 and I can't efile.

TT help was of not much help as I'd looked up 8937 myself. I wish I didn't have to deal with 8937 and the adjusted cost basis in schedule D would be sufficient.

[NCperson]

frankly, I would not worry about the additional forms; the chances that the IRS is going to ask about such a small number is quite low....and if they do, you have the documentation to support it.