Taxes.How do I list shares of a new stock that are given as a dividend instead of cash?

Question

A company I owned stock in issued shares of stock in a company they held. I was given 23 shares of stock in in that company as a dividend instead of cash. How is this listed for tax purposes?

XTO energy issued me 23 shares of Hugoton Royalty Trust as a dividend. XTO was an owner of HGT shares..

Answer 1

If you leave the name of the company I can get the info and tell you what the results are.

XTO Energy Provides Tax Basis Information for Hugoton Royalty Trust Units Dividend
FORT WORTH, Texas, May 12 /PRNewswire-FirstCall/ -- XTO Energy Inc. (NYSE: XTO) today distributed a dividend of .059609 units of Hugoton Royalty Trust (NYSE: HGT) for each issued and outstanding share of XTO Energy's common stock held as of the April 26, 2006 record date with an ex-dividend date of April 24, 2006. The distribution is a qualified dividend for tax purposes. The basis of the HGT units received is $28.305 per unit, which is the average of the high and low NYSE price traded for the units on May 12, 2006. Cash paid in lieu of fractional shares is based on the net proceeds received by XTO from the third party sale of fractional and unallocated units. The total taxable dividend is the sum of the basis of the units and the cash received.

XTO Energy Inc. is a domestic energy producer engaged in the acquisition, development and discovery of quality, long-lived oil and natural gas properties in the United States. Its properties are concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska, Utah, Mississippi and Louisiana.

This release can be found at http://www.xtoenergy.com .

SOURCE: XTO Energy Inc.


I assume you own 386 shares of XTO Energy. Your therefore received 121.59 in cash dividends, all of which should be qualified. In addition you also got a stock dividend which is valued at 651.30, all of which is qualified. Total dividends therefore are 772.89 regular, and 772.89 qualified. You also received 0.28 cents in gross proceeds from cash in lieu of fractions. This is a schedule D transaction. Holding period begins with the date you bought XTO. You also have 23 shares of Houghton with a basis of 651.02. Once again, holding period on the Houghton started on the date you purchased XTO.

Answer 2

1

Answer 3

Disclaimer: I am NOT an accountant. The knowledge I share comes from my experience with turbo tax and statements from my broker. Consider this advice speculative.

You should have recieved a 1099-Div. The categories on that form are:
1a Ordinary dividends
1b Qualified dividends
2a Capital gain Distributions
2b Capital gains that represent Unrecaptured Sec. 1250 gain
2c Capital gains that represent Sec. 1202 gain
2d Capital gains that represent Collectibles (28%) gain
3 Nondividend distributions
.
.
.
8 Cash Liquidation Distributions
8 Noncash liquidation Distributions

You should be able to tell from the dollar amount in one of these categories where your 23 shares is accounted for. My best guess would be line 2a ( and b, c OR d).

If they are not reported on your 1099, you may not have to list the 23 shares this year...you will need to list them when you sell to show your realized gain (or loss).

Hope this helps.

Answer 4

This sounds like the second company was spun off from the first company and existing shareholders received shares in the second company. Most companies arrange these as non-taxable events.

Check the website of both companies. Look for an Investor Relations page. Most companies make information about spin-offs available there. If there isn't anything, try calling the Investor Relations departments.

Answer 5

Not really enough information to say. The company that paid the dividend and gave you the shares should send you a statement that explains what it's for and what the tax treatment should be.

Answer 6

Generally stock dividends are not subject to tax. You just have zero basis in the shares when you sell them.

Agree with the prior posts. The company should have included some info on their tax treatment. Try contact them. And if a spin off there should not be a taxable event until you sell them.

Answer 7

If I'm not mistaken (and I'm NOT offering tax advice), you can get taxed on dividends unless you reinvest them directly into that stock.