Stock Acquisition

[Christian]

In 2017 British American Tobacco acquired Reynolds American Tobacco in a stock and cash deal. The owners of Reynolds received cash and British American stock for the Reynolds stock. The form provided  by British American for the sale is confusing to say the least although this is indicated as a taxable exchange. To my thinking all that is needed is the basis of the acquired shares which would then be subtracted from the COMBINED cash and fair market value of the British American stock received. Any input on this would be much appreciated.

[Gail in Virginia]

I had a client with the same stock, and If I recall correctly you treat this as though they sold the Reynolds stock and received cash and shares in exchange.  So the value of the BAT is added to the cash to get proceeds and then the basis for the Reynolds is subtracted to get net gain (loss).  So I agree with what I think you said.  Sorry, it has been a long April.  . 

[Christian]

I am so glad to find a fellow Virginian with the same sale. Yes, Gail that is what I meant. Add the  value of the BAT shares they received to the cash they received and deduct their basis. The info supplied by BAT is totally confusing. They seem to show a sale of some BAT shares and report a short term gain and a long term gain for it. The client got $29.44 a share in cash and .503 or so BAT shares for their RAI shares. The monetary value of the BAT shares was given so it seemed a pretty simple straight forward computation. I quite simply could not make heads or tails of the other material they sent.