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Author: EdSouth One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121426  
Subject: Stock Conversion Date: 5/25/1999 8:56 PM
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We covered this issue in Intermediate Accounting, but that was too many years ago:

I had 5 shares of ICN Pharmaceuticals, purchased in 1974 and filed away, forgotten. Cleaning out the files recently, I stumbled over them, said a few choice words, and shipped them off to my broker to be put into my trading account.

Somewhere along the line, ICN reorganized/merged and a new issue of stock replaced what I had. I now have 3 shares of "new" ICN and $17.65 cash.

If I remember right, my basis for the 3 shares is original cost - $17.65, and the reference date is the date of original purchase.

Or...help!!!
EdSouth
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15716 of 121426
Subject: Re: Stock Conversion Date: 5/25/1999 9:52 PM
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[[I had 5 shares of ICN Pharmaceuticals, purchased in 1974 and filed away,
forgotten. Cleaning out the files recently, I stumbled over them, said a few choice
words, and shipped them off to my broker to be put into my trading account.]]

Great...just like finding money!!!

[[ Somewhere along the line, ICN reorganized/merged and a new issue of stock
replaced what I had. I now have 3 shares of "new" ICN and $17.65 cash.

If I remember right, my basis for the 3 shares is original cost - $17.65, and the
reference date is the date of original purchase.]]

The reference date for short/long term holding is certainly the date of the original purchase. Your remaining basis in the "new" shares may or may not be as you computed.

Remember that you'll have to spread your total original basis over all of the shares in order to account for the "partial" shares that were sold (how you arrived at the $17.65). So the computation may be a bit more complicated, and it is very likely that the ONLY way that you'll be able to find the exact correct computation would be to deal with the company directly in order to get the "formula" that you need to correctly allocate your entire basis over ALL of the shares.

I have a series of posts regarding stock splits, spin offs, and split ups that you may be interested in. You can find it in the Taxes FAQ area. It may help you understand your problem and also assist you with a solution.

TMF Taxes
Roy

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Author: EdSouth One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15722 of 121426
Subject: Re: Stock Conversion Date: 5/26/1999 6:53 AM
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Thanks, Roy.

...it is very likely that the ONLY way that you'll be able to find the exact correct computation would be to deal with the company directly in order to get the "formula"...

I was afraid of that.

Well, off to the websites!

EdSouth

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