1099 MISC

[MargaretMort]

I swear,and I am, this tax season is out to get me. I am trying to do our income taxes which really shouldn't be so hard since I figure them out months in advance. BUT....we received a check for $62 which was our pro rata share of a stock that crashed some time ago. We took the loss when it occured, this is a "supplemental distribution" as a result of a law suit. Okay, big whoop. The payment is recorded on a 1099 Miscellaneous income in box 7 as nonemployee compensation.

Now, where should it go on the 1040? It isn't wages nor self-employment which are the choices in the drop down box on the 1099 Misc. and so it doesn't show up anywhere. It isn't any of the items listed in the bunny hop from line 21. Quite frankly, it is Other income but that isn't a choice. I plan to put it on line 21 with an explanation but what a total pain.

Any suggestions? And, as always, thanks for any assistance. MM

[Kea]

Also a pain, but you may want to check with the payer and see if they filled out the form wrong.

I just had to do that for a mutual fund that was bought and merged into another fund family. All the paperwork we got at the time was that it was a tax free transaction. Then yesterday I got a 1099B for the full amount that was transferred. It was labeled as a redemption. I called and the lady I spoke to said she would look into it. She called back and said the form was in error and they will be mailing corrected 1099s.

Who knows, that might work for you.

I do agree that it would go on line 21, but it should not be box 7 regardless.

Good luck.

[JohnH]

For a small amount like this, I'd put it on Schedule D, use "Various" for the acquisition date, and force it as "Short Term Gain". This covers most of the bases and generates the right tax liability (unless there happen to be capital loss carryforwards).

[Lion EA]

I had one of these a very long time ago. I think the rule was that if they still owned the stock, it reduces the cost basis. If they already sold the stock, it's Schedule D proceeds with zero basis. I'd probably do what John suggested.