. I own stock in a company which recently spinned off one of its businesses. I got a number of shares of the new company for each 10 shares of the old company. The broker sent me a form 1099-B, showing $5.18 as gross proceeds. He explains that instead of giving me fractional shares, the company decided to give me cash. My question is: how is this amount to be declared to the IRS? Short term capital gains? Dividend? Does anyone know? I realize it's a minor amount, but I want to report it correctly.You should have received instructions from the original company giving guidance (from their attorneys) as to the tax treatment of the transaction (the spin-off). If you don't have these, contact the company or check their website.Typically, cash in lieu of fractional shares is treated as if you sold the fractional share. The basis in the new shares will be some portion (see the company's advice mentioned above) of the basis in the original stock. The "purchase date" generally is inherited from the original stock.
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