Form Il-4644 - Gains From Sales Of Employer'S Securities Received From A Qualified Employee Benefit Plan Page 2
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1
2Form IL-4644 Instructions
What is the purpose of Form IL-4644?
the August 1, 1969, fair market value. In the absence of an appraisal,
This form is to report the gains from only the sale or exchange of
you must use the “number-of-months” method.
securities of an employer that you received in a distribution from a
Unlisted Securities: Fair Market Value Readily Ascertainable
qualified employee pension, profit-sharing, or stock bonus plan.
by Appraisal – If the gain was not from a security traded or quoted
Do not use this form for the sale or exchange of securities received
between July 28 and 31, 1969, write the fair market value of the
as the result of the exercise of a stock option under an employee
property on August 1, 1969, only if the fair market value was readily
stock purchase plan.
ascertainable on that date. Attach a bona fide, independent written
Step 1: Provide the following information
appraisal as of August 1, 1969, made by a competent appraiser of
recognized standing and ability, to support the readily ascertainable
Lines 1 through 4 – Follow the instructions on the form.
fair market value. Book value is not generally acceptable as evidence
Step 2: Provide general security information
of the August 1, 1969, fair market value.
Column A – Write a description of each security as shown on
Unlisted Securities: Fair Market Value Not Readily Ascertain-
U.S. 1040, Schedule D, or U.S. 1041, Schedule D.
able: The Number-of-Months Method – If the fair market value of
Column B – Write the date that you received the distribution of
the property was not readily ascertainable on August 1, 1969, write
securities (by distribution from a qualified employee benefit plan).
a fraction (also called “applicable fraction”) whose numerator is
Column C – Write the date that you sold the security.
the number of full calendar months you held the property before
Column D – Write the total gain during the tax year for each security
August 1, 1969, and whose denominator is the total number of
as shown on U.S. 1040, Schedule D, or U.S. 1041, Schedule D.
full calendar months you held the property. Do not include in the
Step 3: Calculate net unrealized appreciation
numerator or denominator the month in which you acquired or
Column E – If, when employer securities were distributed, you
disposed of the property. If the property was acquired in July, 1969,
• were informed of the market value of the securities as of the date of
write zero in Columns I and K.
distribution, write that market value for the securities sold.
Column J – Write the federal tax basis as of August 1, 1969, for the
• were not informed of the market value of the securities as of the
securities sold. Your federal tax basis is the amount you would have
date of distribution, follow the instructions below and write the fair
written as “cost or other basis” on federal Schedule D if you had sold
market value of the securities sold.
the property on August 1, 1969.
In the absence of a reported market value from your employer,
Note: If Line 18 is a gain, you must complete Schedule F for
you must use, as fair market value of securities traded on a
Form IL-1040 or Form IL-1041. On Schedule F, Line 3, write the
national exchange, the closing price of the security on the date of
amount from Step 4, Line 18, of this form.
distribution. If the security was not traded on the date of distribution,
Column K - If Column I is a dollar amount, subtract Column J from
use the closing price of the security on the last trading day
Column I and write the difference. If Column J is greater than Column
preced ing the date of distribution. If the security was traded in the
I, write zero. If you wrote a fraction in Column I, multiply Column D by
over-the-counter market, the fair market value of the security must
the fraction and write the result.
be the average of the bid-and-ask price for the security on the date
Columns L through M - Follow the instructions on the form.
of distribution. If the security was not traded on a national exchange
or in the over-the-counter market, then the fair market value of the
Example
security must be determined according to the method of valuing the
•
Mr. Brown retired on June 30, 1968, and received a lump-sum
securities specified in the written plan, established by the employer.
distribution from his employer’s qualified profit-sharing plan of 100
Stock splits and stock dividends – Securities received as a
shares of his employer’s securities. The fair market value of the 100
result of either stock splits or stock dividends from an employer
shares was $1,000 (or $10 per share) as of the date of distribution.
should be reported on this form when they are sold. The market
Mr. Brown is notified by the trustee of his employer’s profit-sharing
value attributable to the original shares must either be apportioned
plan that the basis for determining profit or loss on the subsequent
among the shares received on the stock split or adjusted in the same
sales of these securities is $7 per share. The $700 basis amount ($7
manner as the basis (i.e., cost) of the original securities was adjusted
per share x 100 shares) may constitute a distribution from a qualified
employee benefit plan for which Mr. Brown may claim a subtraction
for federal income tax purposes.
from Illinois income in the year of receipt. See Form IL-1040 instructions,
Example: If you received 100 shares in a distribution and the market
Line 5, and Publication 120, Retirement Income, for further details.
value at the date of distribution was $600 ($6 per share), the market
•
Furthermore, Mr. Brown is allowed to defer reporting as income the
value as of the date of distribution attributable to each share after a
$3 per share of net unrealized appreciation (the difference between
two-for-one stock split (200 shares) would be $3.
the market value of the securities received of $10 per share and his
Column F - Write your federal tax basis for the securities sold as
cost or basis of $7 per share) until he sells the shares at a gain. This
of the date of distribution from the employer’s plan. Generally, this
$3 per share of deferred gain will be considered as a distribution
amount is the same as the basis or cost used to determine your gain
from a qualified employee benefit plan and may be subtracted from
on federal Schedule D.
Illinois income upon the sale of the shares if and to the extent the
shares are sold for at least a gain of $3 per share.
Columns G and H - Follow the instructions on the form.
•
If Mr. Brown sells 50 shares during the taxable year for $20 per
Step 4: Identify securities received prior to 8/1/69
share, he would report a federal gain of $13 per share or a total gain
Column I - Listed Securities: If the gain was from a security listed
of $650. Mr. Brown would be entitled to subtract $3 per share (or
on a national securities exchange or quoted in the over-the-counter
$150) of this gain as a distribution from a qualified employee benefit
market between July 28 and 31, 1969, write the market value of the
plan in computing his Illinois taxable income. Mr. Brown would file
property on August 1, 1969.
Illinois Form IL-4644. Step 2 would show a gain of $650. Step 3
If the security was traded between July 28 and 31, 1969, use the
would show the following: E is $500; F is $350; G is $150; H is $150.
•
price of the last sale during the period to value the security. If the
Since Mr. Brown acquired the shares prior to August 1, 1969,
security was not traded during this period, use the average of the
he would complete Step 4 to determine if he was entitled to an
additional subtraction on the amount of gain in excess of $150.
bid-and-ask quotations on July 31, 1969, to value the security.
For example, if the August 1, 1969, market value of the shares was
If you exchanged through a tax-free exchange, a listed security
$15 per share, Mr. Brown would report in Column I - $750 (50 x $15);
that you held on August 1, 1969, for an unlisted security and this
in Column J - $350 (50 x $7); in Column K - $400 ($750 less $350);
year you sold the unlisted security, you must use the listed value on
in Column L - $400; and in Column M - $250. Line 18 would show
August 1, 1969, as the fair market value.
a gain of $250, which may be subtracted from Illinois income by
If, on the other hand, you exchanged, through a tax-free exchange,
completing Schedule F.
an unlisted security that you held on August 1, 1969, for a listed
security and this year you sold the listed security, you must use a
bona fide independent written appraisal, if you have one, to compute
*ZZZZZZZZZ*
IL-4644 back (R-12/13)
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