Form 1099-DIV Box 3: The Return-of-Capital Basis Trap for REIT, BDC, and MLP Investors
A practical walkthrough of Form 1099-DIV Box 3 nondividend distributions — how return-of-capital payments from REITs, BDCs, MLPs, and managed-distribution funds reduce your cost basis under IRC Section 301(c)(2), convert into immediate capital gain under 301(c)(3) once basis hits zero, and what records you need to keep so the IRS matching program never catches you short.
Section 1059 Extraordinary Dividend Basis Reduction: The Corporate Shareholder Trap That Turns Tax-Free Dividends Into Immediate Capital Gain
Section 1059 reduces a corporate shareholder's stock basis by the nontaxed portion of an extraordinary dividend — 5% threshold for preferred, 10% for common — when received within two years of acquisition, with excess immediately taxed as capital gain. This guide covers the thresholds, the 85-day and 365-day aggregation rules, the FMV election, the non-pro-rata redemption exceptions, and the lot-level bookkeeping that keeps corporate finance teams out of audit trouble.
Form 1099-B Cost Basis: Reconciling Covered and Noncovered Securities on Form 8949
Brokers often report a wrong or zero cost basis on Form 1099-B, especially for RSUs and ESPP shares. This guide explains covered vs. noncovered securities, Box 1e and Box 5, and how Form 8949 adjustment code B corrects basis so you do not pay tax twice on the same income.
Form 1099-B Cost Basis Reconciliation: How to Avoid Paying Tax Twice on the Same Dollar
Form 1099-B Box 1e shows your broker's cost basis, but Box 5 determines whether the IRS sees it. A working guide to covered vs. noncovered securities, Form 8949 adjustment codes (B, W, Q, O, T), and the RSU/ESPP basis corrections that prevent double-taxation.
MLP K-1 Tax Issues for Individual Investors: UBTI, Section 751 Recapture, and Multi-State Filings
A Master Limited Partnership pays cash quarterly but issues a Schedule K-1, not a 1099. Most distributions reduce your cost basis instead of being taxed, holding units in an IRA can trigger UBTI and a Form 990-T once income exceeds $1,000, and selling converts depreciation into ordinary income under Section 751 — taxed up to 37%.
How the OBBBA's Tiered QSBS Exclusion Changes the Math for Founders, Employees, and Angels
The OBBBA raised the Section 1202 QSBS cap to $15 million, lifted the gross-asset ceiling to $75 million, and replaced the five-year cliff with a tiered 50/75/100 percent exclusion at three, four, and five years — but only for stock issued after July 4, 2025.
Section 1377(a)(2) Closing-of-Books Election: How S Corporations Allocate Pass-Through Income When a Shareholder Leaves Midyear
Section 1377(a)(2) lets an S corporation split its tax year when a shareholder fully exits, allocating pass-through items to the period each owner actually held stock. This guide covers when the election is available, who must consent, the 1.1368-1(g) alternative, and the bookkeeping it demands.
The 30-Day Decision That Can Save Founders Millions: A Plain-English Guide to the Section 83(b) Election
A Section 83(b) election lets founders and early employees pay ordinary income tax today on the full value of restricted stock instead of at each vest. Filed within 30 days on IRS Form 15620, it can convert millions of phantom ordinary income into long-term capital gain and start the QSBS holding clock on day one.
Give It Now or Leave It Later? The Basis Trap That Quietly Costs Families Hundreds of Thousands in Capital Gains Tax
Lifetime gifts under IRC Section 1015 carry over the donor's basis, while inheritance under Section 1014 steps it up to fair market value at death — a difference that can shift a family's after-tax outcome by six figures on a single appreciated position under the 2026 $15 million federal exemption.
Section 302 Stock Redemptions: Sale vs. Dividend Treatment in Closely-Held C Corporations
A practical guide to Section 302 stock redemptions in closely-held C corporations — when a buyback gets capital gain treatment versus dividend treatment, how Section 318 family attribution disqualifies most family redemptions, and how the four 302(b) tests plus the 302(c)(2) waiver preserve sale treatment.
Section 302 Stock Redemption: How Closely-Held C Corporations Avoid Surprise Dividend Treatment
Section 302 of the Internal Revenue Code decides whether a closely-held C corporation's stock redemption is taxed as a capital sale or a full-amount dividend. This guide explains the three Section 302(b) tests, the Section 318 attribution traps that ensnare family-owned companies, the 10-year family-attribution waiver, and the partial-liquidation safe harbor under Section 302(b)(4).
The $2 Million Mistake: Why Gifting Appreciated Stock to Your Kids Can Be Worse Than Doing Nothing
A practical guide to Section 1015 carryover basis versus Section 1014 stepped-up basis, the dual basis trap for depreciated assets, and the 2026 decision framework for whether to gift appreciated property now or hold until death under the permanent $15 million exemption.