Cash in Lieu of Fractional Shares
A company you invested in might send you a check instead of crediting a fractional share to your stock account. You might also receive a Form 1099-B at the end of the year with the description of “cash in lieu.”This is for the cash (the check) you received in place of receiving a fractional share.
There are different reporting rules depending on why you received the cash.
The company might have sent you cash in place of a fractional share after a stock split. Most corporations don’t issue fractional shares when they split a stock. They pay the shareholder cash for the fractional share, and the fractional share is considered sold. So, you’ll receive a 1099-B.
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Generally, paying gift tax is not an issue for the person receiving the gift. The giver, however, will generally only file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $15,000 per person for 2018. The giver may also not owe gift tax due to their lifetime exemption.