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I owned stock in a company that was bought out by another company last year, which involved both cash (cash to boot) and stock consideration. In the past, I've seen the amount reported on my 1099-B (Box 2, sales price/gross proceeds) as the cash to boot amount. When I received my 1099-B this year, I see the amount on this one reported as my original cost basis plus the cash to boot amount, which is throwing me off.

Anybody have experience with calculating based upon this? I know my original cost basis shouldn't change, and I have the cost basis and proceeds amount of the cash in lieu of the fractional share, so it looks like what I need to know is my adjusted cost basis in the new whole shares, or if I'm missing anything else about why this is different than what I was expecting.

FYI, I've reviewed costbasis.com and they are stating the brokerage should either report it as the cash to boot, or the cash to boot plus stock consideration, so I have something different that what their site is saying I should have, hence the confusion. I asked the brokerage to confirm, they reported back to me the amount was reported to them by the surviving company. Ideas?

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I had to deal with it in 2011 (TLCR). It was a PITA.
But I followed the steps listed at http://fairmark.com/capgain/mergers.htm

If you PM, I will send you an Excel file I created. It has the formulas. You will have to just plug-in your numbers.

Disclaimer: IANACPA.

edit: fixed link

Sounds somewhat like the Medco- Express Script merger:

Subject to the discussion below regarding Section 304 of the Code, a U.S. holder of Medco common stock generally will recognize gain, but not loss, on the exchange of Medco common stock for New Express Scripts common stock and cash (excluding any cash received in lieu of fractional shares) equal to the lesser of:
• the excess of (i) the sum of the fair market value of New Express Scripts common stock received and the amount of cash received in the Medco merger over (ii) the U.S. holder’s tax basis in the Medco common stock surrendered in the Medco merger, and
• the amount of cash received by such U.S. holder in the Medco merger.
For this purpose, a U.S. holder must calculate gain or loss separately for each identifiable block of shares of Medco common stock that is surrendered in the exchange, and the U.S. holder may not offset a loss recognized on one block of the shares against gain recognized on another block of the shares. Subject to the discussion below regarding Section 304 of the Code, any gain recognized by such U.S. holder will generally be treated as capital gain and will be long-term capital gain if the holding period for shares of the Medco common stock that are surrendered in the exchange is more than one year as of the effective time of the Medco merger. The aggregate tax basis of the New Express Scripts common stock received by a U.S. holder (including fractional shares deemed received and redeemed as described below) will be the same as the aggregate tax basis of the shares of Medco common stock surrendered in the exchange, decreased by the amount of cash received, and increased by the amount of gain recognized. A U.S. holder’s holding period for the New Express Scripts common stock received in the Medco merger will include the holding period of the shares of Medco common stock surrendered in exchange therefor.

Instead of trying to compute all that yourself, why not use a good cost basis application online that will already have the corporate actions incorporated into the cost basis calculation. For under twenty dollars, just have it automatically calculated for you. That would be my suggestion. Get it quick, cheap and accurate. Corporate actions complicate basis in many instances. Spin-offs, buy-outs, split-offs, mergers and more. Nothing like having owned AT&T and having to calculate where that went...the application helped me tremendously!

daisy6755 said:   Instead of trying to compute all that yourself, why not use a good cost basis application online that will already have the corporate actions incorporated into the cost basis calculation. For under twenty dollars, just have it automatically calculated for you. That would be my suggestion. Get it quick, cheap and accurate. Corporate actions complicate basis in many instances. Spin-offs, buy-outs, split-offs, mergers and more. Nothing like having owned AT&T and having to calculate where that went...the application helped me tremendously!
Which application do you recommend for corporate action calculations?



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