Q: Cash in lieu on 1099-B

[Ken Hancock]

In 1995 one of the companies I own stock in was taken over which
resulted in a stock exchange where I received both return of capital
and cash in lieu of fractional shares. As I had no other stock trades
I would not have to file a Schedule D. Both the cash in lieu and
return of captiable are declared on my 1099-B.

Where's the correct place to declare such income? My instinct is
to file a schedule D and in the Long term gains make an entry with
a blank cost basis and blank sales price and just enter the gain.
Does this sound correct or does anyone have the real rules?

Thanks in advance,

Ken

--
Ken Hancock | INTERNET: ke...@vgi.com
Isle Systems | Compuserve: >INTERNET: ke...@vgi.com
Macintosh Consulting | AOL: KHancock
| Disclaimer: My opinions are mine,

[TomHealy CPA]

Ken,

Re: <In 1995 one of the companies I own stock in was taken over which

resulted in a stock exchange where I received both return of capital
and cash in lieu of fractional shares. As I had no other stock trades
I would not have to file a Schedule D. Both the cash in lieu and
return of captiable are declared on my 1099-B.

Where's the correct place to declare such income?>

Schedule D is the correct place. Technically, you need to allocate the
basis of your stock between the fractional shares sold and all shares.
You then calculate a gain or loss on that. Your remaining shares' basis
is reduced by the basis allocated to the fractional shares. For
simplicity, if the amount is small, some people do what you suggest, even
though it means owing more tax now.

Tom Healy
Solving your tax and business problems with
Professional service ... Personal attention
Serving research, software & consulting companies; and individuals
THOMAS E HEALY, CPA, PC Boulder, CO (303) 443-1804 voice & fax