Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Calculating Tax Basis on Mergers and Spin-of Date: 4/8/1998 10:12 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
[[1. I own a stock, V (paid $1000 for 100 shares or $10/share), for >18 months and it merges with
another company to form company W (they increase my original 100 shares of V to 300 shares of
W after the merger). If I sell immediately after the merger a)do I pay long or short term capital gains
and b)how do I calculate my per share cost for this gain? Is it simply 1000/300 or 30/share?

2. I also own stock, Y (paid $4000 for 100 shares or $40/share), for > 18 months and it spins-off
Company Z. Because I own 100 shares of Y, I am given 25 shares of Z. If I want to sell Z, a)how
do I calculate my per share price and b) would it be considered a short or long term capital gain? Is
my long term cost basis for Y unchanged or does the spin-off correct for the loss of Z?

I know this is confusing and I am not sure if I have supplied all the necessary info but I would
appreciate anyone's advice and/or direction to my questions.]]

Only the COMPANIES involved can provide you with the specific formula required to spread your basis in the old shares over the new shares and spin off shares. They should have already been in contact with you on this issue (i.e., forwarded the formulas to your for your use). But if this information has not made it to you, you'll have to contact either your broker of the companies involved.

TMF Taxes
Roy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement