The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Tax implication on GDT & JNJ deal||Date: 4/6/2005 2:50 AM|
|Author: forestbin||Number: 78328 of 125869|
Thanks Ira for very useful information. I was thinking totally in the wrong direction. Anyhow, looks like large amount of capitol gain can not be avoided in such cash + stock deal. With that in mind, it's probably wise to plan early to reduce the impact on AMT this year.
Also consider another scenario:
At the time of merger, JNJ price is higher than the specified collar upper boundary, say $75 (You never know, it's already close to $70 as of today). One GDT share exchanges for 30.40 + .6797 JNJ @$75. As such, the value increases to 81.38. So the gain should be reported as the less of 81.38-50=31.38 and 30.40, i.e. 30.40. The basis of .6797 JNJ is based on market value, i.e. 50.98. Am I right?
Also, do you know how the options will be affected through such cash+ stock merger in general? Thanks.
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