You said:"Generally you will put this amount on Schedule D, either long-term or short-term depending on how long you owned stock in the liquidated corporation. You will recognize a gain or loss equal to the difference between the amount of the liquidating dividend and the cost basis in the stock."I realize that you said "Generally", however, seeing that I didn't receive any money for the original stock but instead turned the stock back in to the company and received another stock in place of it, why wouldn't I transfer the cost basis from the 1st stock to the 2nd one. It doesn't seem fair that I would be required to sell the 2nd stock or borrow money in order to pay for the capital gains. That seems as bad as selling what you inherit to pay the inheritance tax. Oh well,I guess I started out with nothing and would end up with something even thought it's a pain in the neck to complicate what has normally been an easy tax return. Thanks anyway.