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I bought the stock of company#1 on their IPO day at around $142. Since then the company has been acquired by a well established company-#2, and they had a 1-2 stock trade - i.e for every 2 stocks of the IPO company, I received 1 stock of the new company. So, effectively I halved the number of shares that I owned.

Subsequently, the stock of company #2 split 2-1, so I landed up with the same number of shares that I originally bought.

Now, historically, the stock price of company#2 has never ever touched $142. So, when I sell this stock, can I still keep my original cost basis of 142 per share ?

It all depends on the documentation you received when co#2 acquired co#1. If that transaction was a tax-free exchange, then you are correct in your conclusion. If there was a taxable component to the exchange, you would have recognized some gain or loss on the merger and your basis in co#2 would be different.


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