The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Stock buyout Date:  2/5/1999  11:32 AM
Author:  TMFTaxes Number:  9539 of 127753

[[I tried to see if there was any information on stock buyouts in the FAQ but I
couldn't find any so I will ask my question.]]

Thanks for lookin', Rusty. Not much there because the issues are very complex, and generally apply specifically to each different buyout, etc. So let's see what you are askin...

[[ In January of 1998 I bought 300 shares of GNT at $25 per share. GNT was
bought out by CNC in July and the shares were converted to 274 shares of
CNC (I can't remember the exact share price). However, there was $47.38 left
over which was placed as cash in my account. How is this "residue" money
treated for tax purposes?]]

And this is why there is nothing in the FAQ area. You really have to go to CNC to determine how to spread your basis of your old shares into your new shares. And how to account for the cash and the sale of any fractional shares. It is specific for this specific business conversion.

So call the CNC shareholder relations people. They should have already give you (or your broker) the formula that you need to spread your basis and account for your fractional share sale. But I'm sure that if you can't find (or weren't given) your copy, they will be happy to provide you with another formula.

TMF Taxes
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us