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Author: synchronicity Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121478  
Subject: Re: Pepsi / Tricon Date: 6/2/1998 1:46 PM
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<<I will be considering the sale of Pepsi stock in August, as I will have held it for 18 months by then. I did receive 5 shares of Tricon from the split. If I sell the Tricon shares, which I will have had less than 18 months, will I be taxed at the higher amount, or because it is split from a stock that I've had 18 months, will I be taxed at the lower rate?>>

See my post number 5373 in the "Investor's Roundtable" area, "Dow Dividend Approach/Foolish Four" Folder. It details the calculations for a similiar situation (the GM/Raytheon spinoff). If I do this right there will be a link to it below:

The short answer is that, because this was a non-taxable spin-off, the holding period for your Tricon stock will be the same as for your Pepsi stock. A portion of the cost of the Pepsi stock gets allocated to the Tricon stock.

The methodology is the same here as for GM/Raytheon, the only difference is the percentages (cost going over to Tricon is 7.5932%, and 1 new share per 10 of Pepsi.)

Hope this helps,
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