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Author: kakoisle Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121562  
Subject: BUD Reorg Charge - Tax Question Date: 12/20/2008 8:47 PM
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(cross posted from BUD board)

I had 100 BUD with etrade. InBev bought out BUD at $70/share. I show $7000 credited to me for the InBev deal as of 18 Nov 08. I also show a "Reorg Service Charge" of $20.00. I spoke to a friend of mine with another broker, he also has a similar charge.

Normally one can take out broker fees, but they are usually part of the same transaction - my understanding is that broker fees for a transaction are not listed separately to the IRS. Does anyone know if I can simply subtract $20 from my gross of $7K and report $6980 net on my US taxes?
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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103113 of 121562
Subject: Re: BUD Reorg Charge - Tax Question Date: 12/20/2008 11:44 PM
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"Does anyone know if I can simplysubract $20 from my gross of $7K and report $6980 net on my US taxes?"

That's what I'm going to do. The $20 fee is directly related to this particular trade. It is not a general account fee or anything similar.

This comes up periodically, often when there is a spin-off or acquisition of one company by another. It is in fact a broker fee, and smells the same no matter what they call it.


Best wishes, Chris

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103114 of 121562
Subject: Re: BUD Reorg Charge - Tax Question Date: 12/21/2008 3:27 AM
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Does anyone know if I can simply subtract $20 from my gross of $7K and report $6980 net on my US taxes?

Yes, sort of.

Your broker is going to report the whole $7000 as the gross proceeds of the transaction. You want your tax return to match that. Otherwise, you'll get a nice letter from the IRS saying your return doesn't match the 1099s they received, and please send in some money.

Instead, you add the $20 fee to the cost of your shares. Same net result, but better matching to the 1099 you'll get.

--Peter

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Author: irasmilo Big gold star, 5000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103115 of 121562
Subject: Re: BUD Reorg Charge - Tax Question Date: 12/21/2008 10:11 AM
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Does anyone know if I can simply subtract $20 from my gross of $7K and report $6980 net on my US taxes?

I agree with Peter. Make sure the sales proceeds entry on your Schedule D matches the 1099-B information your broker provides. If you still need to adjust for the reorg fee, make the adjustment in the cost basis amount.

Ira

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Author: kakoisle Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 103145 of 121562
Subject: Re: BUD Reorg Charge - Tax Question Date: 12/23/2008 8:38 PM
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Thanks. Matching the 1099 was a major concern. Seems reasonable, meaning less likely for Uncle Sam to send me the friendly "pay up, citizen" letter. I guess they still could do so, but I still would have the info to back this up.

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