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The IRS need not do so. Only you do. If you're audited, and your method isn't sufficient, then the IRS can insist you claim a cost basis of zero.

I guess I could use that as my worst-case. Given the low number of shares, it is not like it would make much of a difference either in terms of being taxed on that gain. Missing the chance to claim the loss would sting a little bit though.

But back to the reason I started this, what is the "sufficient" method when dealing with a merger? Is my basis figured on the amount of the original purchase or the value at the time of the merger? Also, as noted earlier in the thread, I have the fractional share paid in cash to deduct from my basis.

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