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In 1992, I bought 500 shares of company E for $11,500. In 2012, company M bought company E for $7,000 cash and 200 shares of E's stock worth $6,000 at time of issuance plus 300 warrants to buy E's stock for $40 any time until 2017. Stock was trading at $30 per share at time of issuance. Warrants did not start trading until issuance. I received a 1099B for the $7,000 cash but no other information was sent to IRS.

Two questions:
1. What gain if any should I report this year.
2. What is my basis in Company M's 200 shares.

The warrants probably have no basis. They are currently trading for $6. If I were to sell them, all the proceeds would be gain, I assume.

Any help would be appreciated.
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Back when the takeover was happening you got paperwork that told you the answers to your questions. If you can't find it, try investor relations, or someone on the stock's discussion board here at TMF may have it.

Phil
Rule Your Retirement Home Fool
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try investor relations

All they tell you is talk to your tax advisor. That's why I tried here. P's board has not had a post since takeover in 5/12.

For cost basis on Schedule D, I allocated my basis in P's stock ($11,500) for the $7,000 cash reported on the 1099B based on the ratio between the cash and total of what I received - $13,000. i.e, 7/13 x 11500. I feel this is correct, but I cannot figure out a cost basis for my M stock.
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Back when the takeover was happening you got paperwork that told you the answers to your questions

All the paperwork told me was what I was getting for my P shares.
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If you list the name of the companies involved, the information might be found with a google search.
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Check out http://www.costbasis.com./

Bob
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