cdallen7 Posted April 1, 2009 Report Share Posted April 1, 2009 Ok, first timer here....I have a few clients that held stock in a local bank. The local bank was bought out by a larger bank. Here is what my clients recieved for each share of stock held in the original bank. Each Pavilion Bancorp shareholder will receive 1.4209 shares of First Defiance common stock and $37.50 in cash. So my question is, how do I handle the stock sale with relation to the original stock basis? Does the original stock basis get netted with the cash payment and cash-in-lieu the client received leaving the client with a $0 cost basis in the new company? Or does the old basis follow the new stock in the new company and the whole cash considerations be what is taxable? Have been unable to find the answer anywhere. If anyone has any links/literature for viewing that would be excellent. Quote Link to comment Share on other sites More sharing options...
JRS Posted April 1, 2009 Report Share Posted April 1, 2009 Can't help you. But, you might post the question to the following website: http://www.fairmark.com/forum/index.php There are some pretty knowledgeable people on the board and always seem will to help. Quote Link to comment Share on other sites More sharing options...
Redneck Posted April 1, 2009 Report Share Posted April 1, 2009 Ok, first timer here....I have a few clients that held stock in a local bank. The local bank was bought out by a larger bank. Here is what my clients recieved for each share of stock held in the original bank. Each Pavilion Bancorp shareholder will receive 1.4209 shares of First Defiance common stock and $37.50 in cash. So my question is, how do I handle the stock sale with relation to the original stock basis? Does the original stock basis get netted with the cash payment and cash-in-lieu the client received leaving the client with a $0 cost basis in the new company? Or does the old basis follow the new stock in the new company and the whole cash considerations be what is taxable? Have been unable to find the answer anywhere. If anyone has any links/literature for viewing that would be excellent. I haven't used it myself but the attached .pdf file purportedly shows how to figure this out. This is the first time I have tried to include an attachment, so I hope it shows up.Cash_Stock_Merger.pdf Quote Link to comment Share on other sites More sharing options...
Redneck Posted April 1, 2009 Report Share Posted April 1, 2009 Ok, first timer here....I have a few clients that held stock in a local bank. The local bank was bought out by a larger bank. Here is what my clients recieved for each share of stock held in the original bank. Each Pavilion Bancorp shareholder will receive 1.4209 shares of First Defiance common stock and $37.50 in cash. So my question is, how do I handle the stock sale with relation to the original stock basis? Does the original stock basis get netted with the cash payment and cash-in-lieu the client received leaving the client with a $0 cost basis in the new company? Or does the old basis follow the new stock in the new company and the whole cash considerations be what is taxable? Have been unable to find the answer anywhere. If anyone has any links/literature for viewing that would be excellent.Also this website might help: http://www.costbasis.com/stocks/cashtoboot.html Quote Link to comment Share on other sites More sharing options...
cdallen7 Posted April 3, 2009 Author Report Share Posted April 3, 2009 Thanks for the help, I think that will get me where I need to be. Great help. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 3, 2009 Report Share Posted April 3, 2009 cdallen7 - I just had this same issue. There is a really cool website that will walk you through this and give you a nice printout for your file of the new basis. I don't know how to link that site to this message, but if you go over to page three of the board and look for my post of March 31, you can get the site off that thread. KC was the one who posted the link. It is something like costbasis.com. Check it out, you will be very glad you did. Tom Lodi, cA Quote Link to comment Share on other sites More sharing options...
Redneck Posted April 3, 2009 Report Share Posted April 3, 2009 cdallen7 - I just had this same issue. There is a really cool website that will walk you through this and give you a nice printout for your file of the new basis. I don't know how to link that site to this message, but if you go over to page three of the board and look for my post of March 31, you can get the site off that thread. KC was the one who posted the link. It is something like costbasis.com. Check it out, you will be very glad you did. Tom Lodi, cA Hmmm - I didn't remember from where I had gotten that website, but it is the same one I posted already. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 3, 2009 Report Share Posted April 3, 2009 My bad. I did not see that you had posted that link. Tom Lodi, cA Quote Link to comment Share on other sites More sharing options...
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