IRS Form 1099-CAP is used by corporations to report a significant change in control or capital structure to shareholders. It is important for shareholders to recognize any gains from cash, stock, or other property received in exchange for company’s stock reported on the form.
What is Form 1099-CAP?
Form 1099-CAP is an IRS form used to report a substantial change in control or capital structure of a corporation which has resulted in shareholders receiving cash, stock, or other property. Shareholders must use this information to report any gains on IRS Form 8949 when they file their income tax return. The form must be filed on the company’s behalf by Jan. 31 of the year following the change in control or capital structure. Only certain shareholders do not need to receive the form, such as those that received stock not subject to gain recognition, and certain types of organizations. All copies of Form 1099-CAP are available from the IRS website.
IRS Form 1099-CAP – Who Needs to Fill It Out?
If you own stock in a corporation that undergoes a significant change in control or capital structure—and you receive cash, stock, or other property as a result—the company will send you Copy B of the IRS Form 1099-CAP: Changes in Corporate Control and Capital Structure. Form 1099-CAP must be filed by Jan. 31 of the year following the change in control or capital structure. If you do not qualify for an exemption, you may be required to recognize gains from the exchange and must report it on IRS Form 8949 when you file your income tax return.
Step-by-Step: Form 1099-CAP Instructions For Filling Out the Document
When a company undergoes a change in control or capital structure, it must file Form 1099-CAP with the IRS. Shareholders who receive cash, stock, or other property from the acquisition of control or substantial change in capital structure must receive Copy B of Form 1099-CAP. Form 1099-CAP must be furnished by Jan. 31 of the following year and contains essential information regarding shareholder details, dates of sale or exchange, aggregate amount received, number of shares exchanged, and classes of stock exchanged. The exempt group, including corporations, exempt organizations, IRS, and others, does not need to receive a 1099-CAP. When filing taxes, shareholders need to use the information from Form 1099-CAP to report gains using Form 8949 (Sales and Other Dispositions of Capital Assets).
Below, we present a table that will help you understand how to fill out Form 1099-CAP.
| Information Required for Form 1099-CAP | Details |
|---|---|
| Recipient Details | Shareholder’s information |
| Dates of Sale or Exchange | Dates related to the transaction |
| Aggregate Amount Received | Total amount received |
| Number of Shares Exchanged | Total number of shares involved |
| Classes of Stock Exchanged | Details of stock classes exchanged |
| Exempt Group | Entities exempt from receiving Form 1099-CAP |
| Use for Tax Reporting | Report gains on Form 8949 |
Do You Need to File Form 1099-CAP Each Year?
Form 1099-CAP: Changes in Corporate Control and Capital Structure is an annual IRS form that should be filed by the corporation on Jan. 31st of the year following a significant change in control or capital structure. It must be provided to shareholders who received cash, stock, or other property as a result of the change. Unless the shareholder is exempt, they must report any gains from that transaction with Form 8949 when they file their income taxes. An entity is exempt if they receive stock in an exchange that isn’t subject to gain recognition, receive less than $1,000 in cash plus stock or property, or provide the corporation with an exemption certification.
Download the official IRS Form 1099-CAP PDF
On the official IRS website, you will find a link to download Form 1099-CAP: Changes in Corporate Control and Capital Structure. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 1099-CAP
Sources:
https://www.irs.gov/forms-pubs/about-form-1099-cap
https://www.irs.gov/instructions/i1099cap
