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.
If you’ve contributed too much to your IRA for a given year, you’ll need to contact your bank or investment company to request the withdrawal of the excess IRA contributions. Depending on when you discover the excess, you may be able to remove the excess IRA contributions and avoid penalty taxes.
What are stock splits? Learn more about stock splits and their cost basis from the tax experts at H&R Block.
Learn more about IRA withdraw penalties with advice from the tax experts at H&R Block.
Are scholarships and grants considered taxable income by the IRS? Learn more from the tax experts at H&R Block.