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Hey FoolishRat, I may be dead wrong, but I figure the value of the warrants is equal to the percentage of value of the warrant to the underlying stock on the day of issue...June 1, 1998. I don't have the exact figures, let's say that on Friday May 29 GSB closed at \$37.50. On Monday, the warrants opened at \$5.75, so the stock was worth \$37.5 - \$5.75 = \$31.75.
The percentage value of the warrant to the stock is \$5.75 / 31.75 = 0.153333. In your case, the 12.50 basis price would be \$12.5 x o.15333 = \$1.92 basis price for the warrant, and \$10.58 basis price for the stock.
Maybe a tax person or a stockbroker could verify this, or maybe a reader of the column has some exact figures.
My situation is a little more complicated. Years ago I purchased Cenfed stock at the IPO price of \$10. It split 3 for 2, and got two 10% stock dividends, bringing the basis price to \$5.39. The GSB merger was for 1.2 shares of GSB for each Cenfed share, so I calculate my basis price at \$4.49 per share. That gives me a \$0.69 basis price for each warrant, and a \$3.80 basis price for each share of GSB.

Now I know why the Fools advocate a long term hold strategy. It's too darn complicated to figure out the basis price when you get ready to pay taxes on the capital gains. Also, I feel the warrants, although just issued, qualify for long term capital gains treatment if the underlying securities were held longer than 18 months.
Any tax folks or stock valuation gurus out there? Thanks...Greyfuldad