Re: Fractional Share Paid in Cash

"granny44" <granny44@xxxxxxxxx> wrote in message news:.googlegroups.com...

When a company splits stock, declares a stock dividend or merges,
the shareholder will often receive a small cash payment
in lieu of a fractional share. Although Publication 550
allocates a cost basis to the fractional share, I have
always declared the proceeds on Schedule D with a cost basis
of zero [though I know it is contrary to Publication 550
instructions]. This results in a small capital gain with no change
in the total cost of existing shares. Is this an acceptable
procedure to the IRS? They have never challenged my practice.

It's acceptable to claim -0- but depending on the dollar amount you could
save taxes paid by getting an more accurate cost amount.









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