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Chevron merged with Texaco to form ChevronTexaco (CVX).
I received 0.77 shares of ChevronTexaco for each share of Texaco.
How do I determine what my cost basis is for my new shares? Multiply by 0.77?

Hi John,

I always do the calculations in terms of total cost basis to get the new per share basis.

Let's say you originally bought 100 shares of TX at \$50.00 per share, plus a \$12.00 commission. Your total cost basis is \$5012.00 for the 100 shares, or \$50.12 each.

After the merger, you now have 77 shares of CVX (100 * .77). Your total cost basis is still \$5012, so you divide \$5012 by 77 to get a new per share cost basis of \$65.0909 per share.

Note that \$65.0909 is equivalent to \$50.12 divided by (NOT multipled by) the ratio of 0.77. To do the conversion, you multiply the share count by the split ratio and divide the cost basis.

Hope this helps.

Mike

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