What Is Cash in Lieu in Investing?

By Lyle Daly – Updated Apr 3, 2025 at 11:19 AM

Key Points

Cash in lieu is a payment replacing fractional stock shares post-corporate actions like stock splits.
Receiving cash in lieu is taxable; report it using Form 1099-B if it's not in a tax-advantaged account.
You're less likely to receive cash in lieu payments if you avoid fractional share trading in your investment portfolio.

When a company goes through a restructure, some shareholders may receive cash in lieu of stock. This type of payment can affect your holdings and your capital gains taxes, as it's considered a taxable event, even though it's done without the investor's endorsement.

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An image of a share certificate. — Image source: Getty Images.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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