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I am both a Marvel (thanks SA!) and a Disney shareholder. This is the first time a company I own has been acquired. I specifically wanted to know the tax implication of the couple of options I am considering:

a) Do nothing - get the cash and DIS stock when the DIS-MVL transaction closes

b) Cash out and dollar cost average into DIS over time

Any thoughts?

- A
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I think we're all waiting for the IRS to weigh in on the tax considerations. It could depend on how the IRS interprets the terms and language of the deal.

One of my other stocks merged with another company a few years ago in a stock + cash deal, and I think I got my new stock tax-free (with a new cost basis equal to a percentage of my original cost basis) and I had to pay capital gains tax on the cash part of the deal. But that was a merger of near-equals, so DIS-MVL could be different.

Most of the advice I've read elsewhere has said, if you want the Disney shares, take the do-nothing approach; if you don't want the Disney shares, sell now and reinvest somewhere else.
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I read most of the prospectus on the deal and the tax implications seem straightforward for most US taxpayers. According to what I read, the gain is the lesser of either:

1. The cash paid ($30 per share) or ...
2. The sum of the cash paid, plus the fair market value of DIS shares received (.7452 DIS share per MVL share), less your basis in MVL.

But this still leaves questions.

I received cash and DIS shares in my brokerage account on January 4 and January 5, 2010. I'm trying to learn whether my gain is realized in 2009 or 2010. I'm also trying to learn what was the fair market value of DIS per share for purpose of valuing the deal and computing my gain. And finally, I'm trying to find out whether the redemption of my fractional DIS share occurred in 2009 or 2010 for tax purposes (that transaction posted in my brokerage account today, January 6). I've written to MVL investor relations to try to get answers to these questions. DIS investor relations doesn't have a posted e-mail address nor a web form! I will post answers to them here if and when I receive them.

In my case, gain is formula #2 since my basis in MVL is approximately $28 per share. That should, in theory, result in a gain of approximately $25 per share, and I'm assuming that the remaining $5 per share is treated as a return of capital, thereby reducing my basis in DIS shares to a sum total of about $5 per MVL share (approx $6.60 per DIS share) less than my original basis in MVL.
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Try this link posted by Bruiser on the Disney board (it's message # 44915 if this link doesn't work)

The site worked for me.

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