Form debuts for Jan. 17 stock basis change reporting deadline


The IRS released new Form 8937, Report of Organizational Actions Affecting Basis of Securities, and its instructions. The deadline for filing the form for 2011 is next Tuesday, Jan. 17. Issuers of specified securities must file the form by that deadline to report organizational actions during 2011 that affect those securities’ basis.

Sec. 6045B, enacted by the Energy Improvement and Extension Act of 2008, P.L. 110-343, requires issuers of stock and other specified securities to file an information return with the IRS within the earlier of 45 days after an organizational action by the issuer that affects the basis of the stock or other specified security, or Jan. 15 of the year following the calendar year in which the action occurred. Such actions are those that affect the basis of the securities in the hands of shareholders, including nontaxable cash distributions and stock distributions, such as stock splits and stock-based acquisitions and mergers. They do not include dividends taxable to shareholders and reportable on Form 1099-DIV.

The issuer must also provide a corresponding statement to each shareholder or nominee by Jan. 15 of the following year. Instead of filing the form with the IRS and providing statements to shareholders, the issuer may report the information on its primary public website in a readily accessible format by the filing date.

The requirement took effect Jan. 1, 2011, with respect to corporate stock generally, and Jan. 1, 2012, with respect to mutual fund or dividend reinvestment plan shares for which an average-basis method is permissible under Sec. 1012. It will take effect for other specified securities (defined at Sec. 6045(g)(3)(B)) on Jan. 1, 2013, or other date specified by the IRS.

In February 2011 with Notice 2011-18, the IRS granted transitional relief with respect to the 45-day deadline for organizational actions occurring in 2011 (see “IRS Provides Transitional Relief for Some Stock Basis Reporting Requirements”). The IRS said that in such cases it would not impose penalties for failure to file the form (which it was still developing) by the 45-day deadline as long as the issuer files the form with the IRS or posts its information to a public website (as provided in the regulations) by Jan. 17, 2012.

Penalties for failure to file are found under the general information-return provisions of Sec. 6721: potentially up to $100 for each return, capped at $1,500,000 per calendar year for large corporations and higher in cases of intentional disregard of the requirement.

The final form was posted on Jan. 5 and the instructions on Jan. 6, giving affected taxpayers less than two weeks before the due date to file Form 8937. Ed Karl, AICPA Vice President—Taxation, noted that this short time frame will make it difficult for taxpayers to file the forms and required statements on time, potentially resulting in large penalties. He said the AICPA is discussing this issue with the IRS.

Paul Bonner ( ) is a JofA senior editor.

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