Hello,
I received a 1099-DIV with about $20 in Box 9 (Cash Liquidation Distribution). The stock is PVTL which merged for cash in year 2019. I took a loss at that time. Since I already took a capital loss, do I report this $20 as a capital gain? The $20 is less than my original cost basis and if I followed the information I found on the internet, it could be reported as a capital loss. But I already took a capital loss in 2019 so I am unsure how to report it for 2024.
Thank you, Ken
Maybe. It’s a return of capital. If you recovered your entire basis by taking the loss in 2019, then it’s a capital gain. Otherwise, it just reduces your basis by another $20.
IRS Pub 550 2024 Publication 550 has a section on “Liquidating Distributions” that reads in part:
AJ
Thank you, AJ. I will report it as a capital gain.
Hi AJ:
I am having trouble with how to report this cap gain on form 8949. I will check Part II box F. Description will be PVTL stock. Should I put year 2019 as the Date Sold in column (c) and the proceeds in column (d) I received back in 2019 and my Cost basis in column (e). Then I am unsure what to report next to identify the $20 as cap gain. Please suggest what to do.
Thank you, Ken
Description should be PVTL liquidating distribution.
Just to confirm - you have no basis left in PVTL - you took a complete loss in 2019? Because if you didn’t take a complete loss, then the $20 will just reduce your current basis by $20. It’s only if you have no basis left that you will have to declare the $20 as a capital gain.
Here’s how I would do this, but if @ptheland has a different way to do it, I would go with his way, because I’ve never had this situation before.
If you do have to declare it as a capital gain, then you should put the date you acquired PVTL as the date acquired, the date you received the $20 distribution as the date sold, with a cost basis of $0 in column E. Because it’s a liquidating distribution that you are declaring as a capital gain, you aren’t adjusting the basis, so nothing goes in column F. Column H should be $20.
If you still have some basis left in PVTL, then the description would still be “PVTL liquidating distribution”, and the dates would still be the same. Your cost basis after you took the loss in 2019 would go in column E. Column F would be an “O” (letter, not number) and column G would be ($20). Column H would be $0 (number, not letter).
AJ
Hi AJ,
Yes, I took a long-term capital loss in 2019 so no more basis. Thank you your suggestion.
So I did a bit of poking around.
It looks like this payment is the result of a class action suit regarding the sale. You should have received some notices about this along the way from somewhere around mid 2020 through the eventual settlement in 2022. I know - we all glance at them and toss most of them out. So no judgement from me on that front. Apparently it took until 2024 to finally close the case and distribute the settlement crumbs to the shareholders (while the lawyers pocket the bulk of the settlement).
So I agree with aj (there’s a shocker for sure!! 
). Report it as a capital gain with zero basis since you’ve already recovered your basis back in 2019. Long term or short term will match whichever was appropriate back in 2019 when you got the buyout proceeds.
–Peter
Thank you, Peter. These crumbs could really make a mess with tax returns. Fortunately, this one should not be the case.
Ken
