Form 1099-B Proceed and Cost basis

[fesemagu]

Is it okay to report taxpayer proceeds with a cost basis of zero? 

[IRonMaN]

Yes, if that's what the cost was, but are you sure there is no basis?

[fesemagu]

Yes there is no cost basis

[BobKamman]

@IRonMaN  Makes you wonder, doesn't it?  Could be one of those stocks that made nontaxable distributions greater than what the shareholder paid for it.  Or maybe a piece of real estate with an easement sold long ago, for more than the basis.  

[sjrcpa]

Or maybe the 1099-B is for a piddly $27 and no one is going to spend time on it.

[IRonMaN]

But my piddly cutoff is $26.99 😜

[PATAX]

@sjrcpa stock received in demutualization of insurance?

[sjrcpa]

The actual basis there is zero.

I was talking about those small dollar ones. You ask the client about basis. They have no idea. I say, OK fine, we use -0-. It's not worth anyone's time to research.

[BobKamman]

@PATAX and @sjrcpa   Zero basis for demutualization?  That's what IRS would have you think.  The wealthiest man in Arizona (Campbell Soup heir) went to court and the judge saw it differently.  Your results may differ. 

https://www.journalofaccountancy.com/issues/2013/jun/demutualization.html 

[PATAX]

@BobKamman Thanks Bob, that is a good article.

[sjrcpa]

I sort of remember that but thought -0- basis was the position now. I'd certainly research it if/when it next arises.