Re: Fractional Share Paid in Cash
- From: "Shyster1040" <Shyster1040@xxxxxxxxxxxxxxxxx>
- Date: Sat, 25 Feb 2006 00:39:38 -0500
The better question is whether you're going to get in trouble down the road
when you sell the shares you own and claim a higher basis than you would
have had if you had allocated basis to the fractional share for which you
received cash. In that case, particularly if it's been years since the
fractional shares were issued and the statute of limitations is now
closed, the IRS may not particularly care that, when the fractional shares
were issued, you paid more tax than you should have.
That being said, the fact of the matter is, you have to allocate your
basis. It's a dirty little job, but it has to be done. For a little
further related reading, see:
http://www.fool.com/school/taxes/1999/taxes990326.htm
http://www.fool.com/school/taxes/1999/taxes990319.htm
Reporting the entire amount of cash received and not allocating basis is
not correct; that the IRS has not called it to your attention is most
likely due to (a) the fact that you're currently overpaying your taxes and
(b) you've had a good winning streak in the audit lottery. However, if
you make a large sale of the remaining stock years down the road and
report little or no gain (because you still have all of the original basis
allocated to the whole shares), you are much more likely to get audited,
and you will then owe additional taxes notwithstanding that you in effect
paid that tax much earlier when you reported the cash as 100% income.
.
- References:
- Fractional Share Paid in Cash
- From: granny44
- Re: Fractional Share Paid in Cash
- From: Perry1
- Fractional Share Paid in Cash
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