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Reporting Form 1099-B cash in lieu of stock to the IRS in ProConnect

SOLVEDby Intuit2Updated almost 2 years ago

There's no specific input field for cash in lieu of stocks or fractional shares within Intuit ProConnect. Instead, you'll need to figure the gain or loss based on the 1099-B received and report the amounts in ProConnect as a regular disposition/sale for Form 8949 and Schedule D.

IRS Pub 550 on fractional shares

Per IRS Pub. 550:

"Fractional shares. You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Report this transaction on Form 8949. Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate."

Example from IRS Pub. 550

"You own one share of common stock that you bought on January 5, 2011, for $100. The corporation declared a common stock dividend of 5% on June 30, 2020. The fair market value of the stock at the time the stock dividend was declared was $200. You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. You figure your gain or loss as follows:

Fair market value of old stock$200.00
Fair market value of stock dividend (cash received)+ $10.00
Fair market value of old stock and stock dividend$210.00
Basis (cost) of old stock after the stock dividend (($200 / $210) * $100)$95.24
Basis (cost) of stock dividend (($10 / $210) * $100)+ 4.76
Cash received$10.00
Basis (cost) of stock dividend- $4.76

Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain."

Follow these steps to enter this example in ProConnect:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Income and choose Dispositions (Sch D, etc.).
  3. Select Schedule D/4797/etc.
  4. Click the blue Details button to expand the input screen.
  5. Under the Dispositions (Schedule D, 4797, etc.) section, enter the following fields:
    • Description of property
    • Date acquired (negative date=various)
      • In the example above, you'd enter 1/5/2011.
    • Date sold (negative date=various)
      • In the example above, you'd enter 6/30/2020.
    • Sales price
      • In the example above, you'd enter the gain of $5.

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