1099-B Question *Related To Dividend Reinvestment*

[ownyourfuture]

My tax info for 2021 is finally available, so I was hoping to do my taxes tonight.
Have one ‘possible’ issue that I thought I'd run past the forum before I start.

These are shares I purchased through an employee stock purchase program while I was working. These aren't stock options. You'd pick a percentage, that amount would be withheld from your check every week, & the total at the end of the quarter would be used to purchase shares at a 15.00% discount.

The only stipulation was that you had to hold the shares at least 2 years.
I last purchased shares in 2015, the year I retired. Shares are held at EQ Shareowneronline.

The company last paid a dividend in Q-4 of 2000
They reinstated an $.80 per share ($.20 per quarter) dividend for 2021. I didn't want to reinvest, so I went to the website & set it up for them to sent me a check every quarter. Apparently , I didn't do that soon enough, so the 1st quarter dividend purchased more shares.

At the end of 2020 I had 1,573.799 shares.

I reinvested a dividend payment of $314.76 into shares @ a price of $96.64 on 03-29-21. This equaled 3.257 shares, & ‘should have’ changed the total from 1,573.799 to 1,577.056

Apparently, EQ Shareowneronline doesn't deal with fractional shares & that 0.056 resulted in them sending me a form 1099-B (Shown Below)

I received the proper 1099-DIV form for the Q1 dividend reinvestment of $314.76 & another for the Q-2 Q-3 & Q-4 payments of $315.40 ($946.20) so that isn't an issue. Total shares in account = 1,577.000

The only explanation I can come up with regarding the 1099-B, is that they reimbursed me for that fractional 0.056 of a share & I'm responsible for paying taxes on that. It's certainly possible I forgot, but I don't remember receiving a check for a fractional share, & if I did, it seems that amount would be shown on the 1099-B form and/or the 3nd screen capture below, which shows a summary of all payments in 2021 ?

I contacted EQ last week, & was given the standard "consult with your CPA" answer. However, at that time, I hadn't considered the possibility that they issued me a check for the fractional share. I'll call them tomorrow to find out.

The first 2 screenshots are the 1099-B & the other is total payments for 2021
I had to host the 1st screenshot at another site. For whatever reason, certain files are blurry if I host them here.

Thanks in advance.

 

[cathy63]

The second screenshot is a 1099-B showing a sale of .056 shares for $0 on 4/8/21. If they sold it for more than that, the 1099-B should reflect the actual sales price, so it seems like they just took the ~$5 that it was worth and didn't pay that to you.

 

[ownyourfuture]

The second screenshot is a 1099-B showing a sale of .056 shares for $0 on 4/8/21. If they sold it for more than that, the 1099-B should reflect the actual sales price, so it seems like they just took the ~$5 that it was worth and didn't pay that to you.

Thanks for the reply. If your theory is correct, & I'm out 5$.....I wouldn't have any problem with that. I was just hoping someone could give me a definitive answer as to whether or not I even have to enter the 1099-B info on my return.

Since the amount is zero, doesn't seem like I should have to.

 

[Sunset]

At $5 per customer and 10 thousand customers, we are talking some big bucks.

why wouldn't they send the money to you, doesn't seem very fiscally responsible of them to just forget about it.

 

[target2019]

Thanks for the reply. If your theory is correct, & I'm out 5$.....I wouldn't have any problem with that. I was just hoping someone could give me a definitive answer as to whether or not I even have to enter the 1099-B info on my return.

Since the amount is zero, doesn't seem like I should have to.

I didn't zoom in, but if they send that 1099-B to you, they have probably sent it to the IRS.

I would enter it as shown, into appropriate boxes.

 

[cathy63]

The $0 sale is listed as a short-term non-covered transaction. The broker has not reported it to the IRS, and you don't have to either. They do not care about a sale on which the proceeds and cost-basis were both $0.

I do think it's weird that they had no problem holding .799 shares of stock at the end of 2020 but they sold .056 shares during 2021. If this were my account, I'd at least ask them why there were no proceeds from that sale.

 

[ownyourfuture]

Thanks for all the replies.
I'll call them later this afternoon & post whatever I find out.

 

[ownyourfuture]

Talked with a representative of the holding company earlier.
The company whose shares I hold, no longer allows fractional shares.
Because of that, the 0.056 fractional share was sold.

Because the commissions/fees were in excess of what the proceeds would've been, the 1099-B form shows proceeds of $0.00

As for whether or not I need to include this 1099-B info on my return, all I can say is that I'm more confused than ever.
Mainly because of the following from the intuit (TurboTax) Q&A site.




June 4, 2019 5:18 PM
I have received form 1099-B, but $0 for all boxes. Do I need to the Premier upgrade?

If you truly have a 1099-B, with zeros in all of the boxes, then you don't need to actually report anything from that statement to the IRS.
Thus, you would not need a Premier upgrade.

On the other hand, if you actually did have some sales activity shown on the 1099-B, even in the absence of a capital gain or a capital loss, then technically that does need to be reported to the IRS. And in order to do that correctly, you would need tax Form 8938 and Form 1040 Schedule D . . . both of which are only available in TurboTax online with Premier (or Self-Employment).

So, if your 1099-B indeed has no information on it, then you can safely ignore it (and also remain in TurboTax online Deluxe).

On the other hand, if your 1099-B shows a net proceeds figure of some kind, let's say for the sake of example a $1,000 sale of some sort, along with a corresponding $1,000 cost basis (equaling a capital gain of $1K - $1K = $0), then this still a reportable tax item. This remains true even without any actual gain or loss. The reason for this is because there is still a $1,000 in gross proceeds amount to report, even if doing so will not truly affect your taxes.



Another

Do I have to report my 1099B's if both are zero capital gain/loss are zero? All of my income is retirement, div, int and under 25k?
In order to report I had to use a more expensive form of Turbo Tax where normally I could use 1040 EZ.
June 6, 2019 8:15 AM

1099B's are to reported even if there is no gain or loss. IRS matches these documents up with the tax return.
If for example you have a sale of $1,000 and your cost basis is $1,000. The IRS will send you a letter with the $1,000 sales price and have a zero cost basis and show it as a short-term gain.

You are correct, with your income level the capital gain if any would not increase the tax on the return, but still must be accounted for.
If not, IRS could be contacting you a year or two from now.

The choice is yours, I just want you to be aware of this.

 

[SevenUp]

If a 1099-B reporting a non-covered sale has proceeds >$0 the IRS will assume a $0 cost basis and thus assume the proceeds are all taxable.

If the 1099-B has $0 proceeds then the IRS could still assume $0 cost basis but there would be nothing to tax.

Doesn't appear to be a need to enter that 1099-B.

 

[cathy63]

The explanation for the sale and the $0 proceeds makes sense now.

I will stand by my opinion that you don't have to report it on your return. If you want to report it, it's a short term capital loss of $5 (your basis being .056*$96.64 rounded off). If your income is in the range where tax is calculated by looking it up in the tables, this probably has no effect on your taxes.

 

[target2019]

When we think of the IRS, in our mind's eye it is a stern-looking interviewer behind a gov't desk. I've never sat in that chair, so can't say it's not true.


I understand what some say about not including this 1099-B. But I would include it. The reality is that the IRS back office is massive computers with all types of inputs. Depending on the year, the algorithms are tweaked to catch more cheaters than last year. Of course they make mistakes. But I believe that the secret to not receiving computer-generated letters is to accurately enter what you receive from various institutions.

On the 1099-B it says to put this in Form 8949 Part I with Box B checked. In the end I am responsible for my tax preparation, not TurboTax.

And I have no argument with anyone suggesting otherwise, and not entering the 1099-B.

 

[pb4uski]

I think that you can not report it if you wish to since the 1999-B show proceeds and basis of $0.

On the other hand, you could report it, adjust the basis to the $5 and take a STCL of $5 which will save you $1 in tax but possibly a love letter from the IRS asking you what is going on here that you would then have to respond to.

I think the best course is obvious.

 

[ownyourfuture]

Appreciate all the replies & understand the reasoning from both those who think I should include the 1099-B info, & those who don't.

Plan on starting my return in a couple hours, & I've decided not to include it.

One more question:

I've prepared my own taxes using tax software since 1999.
However, last year was the first time I e-filed instead of printing everything up and mailing it in. Both the federal and state returns were accepted.

If it turns out my decision not to include the 1099-B info is wrong, will/would the feds immediately reject my e-file request, & more importantly, when that happens, do they give you any specific explanation as to what the issue is ?

Thank You

 

[cathy63]

...
If it turns out my decision not to include the 1099-B info is wrong, will/would the feds immediately reject my e-file request, & more importantly, when that happens, do they give you any specific explanation as to what the issue is ?

Nope, it's not an immediate rejection. I did an amended return last Friday for someone who forgot to bring in a 1099-B when we e-filed their return a couple of weeks ago. Both the original return and the amended one were accepted by the IRS.

The rejections I've seen are usually one of these: someone already filed with one of the SSNs on the return; an EIN was entered incorrectly; a bank routing number isn't in their database.

 

[ownyourfuture]

Nope, it's not an immediate rejection. I did an amended return last Friday for someone who forgot to bring in a 1099-B when we e-filed their return a couple of weeks ago. Both the original return and the amended one were accepted by the IRS.

The rejections I've seen are usually one of these: someone already filed with one of the SSNs on the return; an EIN was entered incorrectly; a bank routing number isn't in their database.

Thanks for this.

 

[ownyourfuture]

Finished up about 2 hours ago. As I type, the federal e-file has been accepted, the state is still pending.
*didn't enter the 1099-B info which was the original subject of this thread*

I strongly suspect both will eventually be rejected because the refunds seem way too high.
Federal $3290
State $873

My income is very easy to figure. Only 2 sources.

#1: Private sector defined benefit pension: $36,696
#2: Dividends, interest, capital gains, etc received from a taxable brokerage account at Fidelity.

Single zero dependents
Age 60
High deductible (HSA eligible) health care plan/ins. Contributed $4600 for 2021

Estimated taxes paid in 2021:
Federal: $1100 x 4 = $4400
State: $700 x 4 = $2800

I'm almost certain there's going to be a problem with my stimulus payment(s) for 2021
Block made me eligible for another $1400 ?
I don't how that’s possible with the following income ?

All Stimulus Payments (date deposited)
#1: 05/22/20 $1,200.00
#2: 01/15/21 $600.00
#3: 04/07/21 $1,400.00



Something else I'm not sure about: HSA distributions. I only used it twice during 2021. Both were for teeth cleaning.
$144.40 x 2 = $288.80 unless I missed it, while doing the return, it never asked me about any HSA distributions, so I went into forms & added it here.

Seems like in the past, I had to provide documentation. In this case, that would've been the date & the dentist I visited ?

Just have to wait and see what happens.

 

[cathy63]

The "Tax payments and credits" line looks fishy. Given that the difference between your estimated payments and that amount is exactly $1400, which is the amount of the 3rd stimulus, I'd take a look at line 30 of your 1040 and see what it says. If it has a $1400 credit on it, then somehow the fact that you already got that $1400 didn't register when you entered it.

That won't lead to a rejection. Once a return is accepted it will be processed. One of three things will happen: your refund will be held up and you'll start exchanging info with the IRS; you'll get the refund and the IRS will also take $1400 from your bank account (possibly the $1400 will be removed before the refund arrives); or you'll get the refund followed by a letter with a bill for $1400.

You don't have to provide documentation for HSA distributions unless you're audited. Since your distribution was used for qualified expenses, line 15 of form 8889 should be the same as line 14a, making the entire distribution non-taxable.

 

[ownyourfuture]

The "Tax payments and credits" line looks fishy. Given that the difference between your estimated payments and that amount is exactly $1400, which is the amount of the 3rd stimulus, I'd take a look at line 30 of your 1040 and see what it says. If it has a $1400 credit on it, then somehow the fact that you already got that $1400 didn't register when you entered it.

I noticed the exact $1400 difference as well Cathy. I found line 30, but when I tried to delete the $1400, the following warning showed up.

 

[ownyourfuture]

I May have found the problem. Went back to the section titled................
Let's see if you qualify for the Recovery Rebate Credit.

It asked "Did you get a third stimulus payment in 2021 (including any plus-up payments)?

I misunderstood that to mean I should've received 3 stimulus payments in 2021, instead of the 3 I've received in total. So I chose 'no'.
When I change it to yes, it takes exactly $1400 off my Federal refund.
$3290 to $1890

Translation: I screwed up

Should I go ahead and make the change ?
What happens then ? It's obvious the return that I already tried to e-file will have IRS issues @ some point.
If I make the changes, will the software allow me to delete the previous e-file and send a new one ?

Thanks in advance