The IRS has released a new form, Form 8937, for the reporting of transactions that affect a security holder's basis. Examples of transactions that may require Form 8937 are stock splits, stock dividends, nontaxable dividends, mergers, and acquisitions. This form is required retroactively to report transactions occurring on or after Jan. 1, 2011.
Form 8937 has two parts. Part I is the general information regarding the reporting entity. Part II requires the information related to the specific transaction.
Who must file: Any taxpayer that takes an organizational action that affects the basis of all holders of the security.
Exceptions: Form 8937 is not required to be filed with the IRS if, by the due date of the form, a completed Form 8937 is posted to a primary public website. In addition, the form is not required if all the holders of the security are exempt recipients.
Special rules: S corporations can satisfy the reporting requirement by reporting any actions that affect the basis of the stock on a timely filed Schedule K-1 for each shareholder and timely gives a copy to all proper parties. A real estate investment trust (REIT) that reports undistributed capital gains to shareholders on Form 2439 satisfies the reporting requirements if Form 2439 is timely filed and given to all the proper parties.
Due date: For transactions occurring during 2011, the form is due Jan. 17, 2012. For transactions occurring after Dec. 31, 2011, the due date for Form 8937 is the earlier of: (1) the 45th day following the transaction; or (2) Jan. 15th of the year following the calendar year of the transaction.
For more information, please contact your KSM advisor.