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Form 1099-B Proceed and Cost basis

fesemagu
Level 3

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

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10 Comments 10
IRonMaN
Level 15

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


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fesemagu
Level 3

Yes there is no cost basis

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BobKamman
Level 15

@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
Level 15

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


The more I know the more I don’t know.
IRonMaN
Level 15

But my piddly cutoff is $26.99 😜


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PATAX
Level 15

@sjrcpa stock received in demutualization of insurance?

sjrcpa
Level 15

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.


The more I know the more I don’t know.
BobKamman
Level 15

@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
Level 15

@BobKamman Thanks Bob, that is a good article.

sjrcpa
Level 15

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


The more I know the more I don’t know.