I owned shares in Champion International at the time it was purchased by International Paper last May. The sale terms were $50 cash per each share of Champion plus $25 worth of IP stock at market on date of sale. The Champion shares were highly appreciated and had been aquired as settlement of my ESOP plan when Champion bought ST Regis Paper where I worked in 1983. My CPA figured my taxes based upon a Like-Kind exchange but listed no value as FMV on line 18 for surrendered property. This resulted in a large capitol gain. When I called the IRS help line I was told with unconvincing clarity this does not qualify as like kind exchange and should be reported on the regular capitol gains form. My question to them was -- Does all of the cost basis of the surrendered shares transfer to the new Intrnational Paper shares? I didn't get a very convincing answere. Can anyone help me clear this up?
The merger/exchange with International Paper was a taxable transaction. That means that you realized gain on the difference between the sum of the fair market value of the IP stock plus the cash received and the original cost basis of your Champion stock. Your cost basis for the International Paper stock will be the fair market value used in the above calculation.Evidently, you could have received the IP stock either in an exchange offer or a merger, and the fair market value will differ according to which way you received the stock. To learn more about that you can go to http://www.corporate-ir.net/media_files/nys/ip/championfaq.pdfGood luck!Rip
The buyout doesn't appear to qualify as a tax free exchange. Here's the link to the frequently asked questions page for the Champion International buyout:http://www.corporate-ir.net/media_files/nys/ip/championfaq.pdfBe happy you actually made money on a stock last year!Jon
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