Cash in lieu of fractional shares

[Deleted]

My husband received a check with the message "The attached check represents cash in lieu of fractional shares in connection with The XYZ Corporation 1 for 4 reverse split transaction."

The check was for $14.32. 

How do you claim this for tax purposes?  His records aren't the best, I will admit. 

I can't just list it under "Misc income," can I?  Any real suggestions? 

ETA:  Looking more closely at the statement of shares exchanged, it looks like the gross amount is $19.88 and they withheld $5.56.  That means some sort of statement is coming that I can plug into TurboTax, right?  I don't care if we pay more in capital gains than we have to on this; I just don't know what to do with it.

[mwcpa]

From IRS publication 17

"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, Sales and Other Dispositions of Capital Assets. 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 in Part I or Part II, whichever is appropriate. "

If you have limited or no records to support the cost of the shares then assume cost is zero... for such a small amount it will probably not have much impact on your tax filings for 2012.

Wait for the 1099-B though before you file (actually non one can file until after 1-30-13, and some may be having to wait longer that to the late gift from Congress, the one where they bickered, played politics and put stupidity and partisanship before the taxpayers) as it may include information about the cost basis.

[Deleted]

Thanks! Too bad they took Karma away.

[mwcpa]

"Thanks! Too bad they took Karma away."

Actually, it was a good thing.... too many people kept patting themselves on the back and their buddies for really insensitive and stupid wacky and far right/far left statements on other boards.....

[Deleted]

If you have limited or no records to support the cost of the shares then assume cost is zero... for such a small amount it will probably not have much impact on your tax filings for 2012.

I ran into the problem with Turbotax that they won't take zero.  They also won't take "Unknown" as a purchase date.  They will take "Various".  Should I use that or a made-up date in 1986?

I did get some information from DH as to what happened.  All of this stock was actually bought some time prior to 1986, and he gave it to his ex for his son at the time of the divorce.  Back then there were thousands of shares.  Somehow (maybe a stock split that happened in the time between one statement, transferring, and the next statement?) a few shares were generated that fell outside the divorce decree.  Now the stock has done a reverse 4-1 split, and the holder sold .8something or the other shares, generating less than $20.  At least it is all gone.

I COULD multiply the .8 something or the other share number by 4 and come up with exactly how many shares he had and then find a historic price for 1986.  But he said the stock has been through multiple name changes in the last 27 years so it would be quite a project.

I wish I could just pay the tax on the 19.88, but TT insists that I declare something.

Thanks for your help.  This is why ordinary people who don't keep great records shouldn't buy stock.