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.

Related Topics

Related Resources

What Is a Wash Sale?

Generally, a wash sale is what occurs when you sell securities at a loss and buy the same shares within 30 days before or after the sale date. Wash sale rules are designed to prevent investors from creating a deductible loss for the purpose of offsetting gains with only a short interruption in owning the security.

What Is Modified Adjusted Gross Income?

Trying to determine your modified adjusted gross income (MAGI)? Find out what goes into calculating modified adjusted gross income and how it’s used.

Tax Questions, Answered: The Tax Implications Of Selling Your Home

If you make a profit on the sale of your home, the gain may not be taxable. Learn more about the tax implications of selling a house with the experts at H&R Block.

Are Insurance Claim Checks Taxable Income?

If you received an insurance check for an auto-accident claim, do you report this as taxable income? Learn more from the tax experts at H&R Block.