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Posted by sharx35 on December 16, 2007, 5:18 am
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> Is your broker saying the "deemed disposition" applies to all shares you
> held or
> just those that were sold?
>
The broker's company Bank of Montreal Nesbitt Burns is treating it as if ALL
85 old TransOcean shares were "deemed disposed" in return for: $33.03 USD
an old share plus 59 New Transcean shares. The key is that BMO Nesbitt Burns
is valuing the New shares, for the purposes of calculating the cap. gains of
the transaction, as being their trading value after the market opened after
the date of the transaction (About Nov. 28). That resulted in a cap. gain of
about $750 CDN. This is contrary to how both Quicken and I are doing it: We
consider 26/85 of the original cost basis as having been the cost basis of
the 26 share reduction (85-59). The remaining 59/85 of the original cost
basis is now the NEW cost basis for the 59 new TransOcean shares. That
approach, which I am using on my 2007 income tax form, results in a cap.
loss of about $250 CDN. TransOceans website comments as of early December
suggest that my approach which is the same as Quickens, is the correct
approach to take: emphasis on the proper apportioning of the original cost
basis. See TransOcean website investor information.
> I still think my only cap gain is on the 45.06 shares plus the fractional
> I was
> "forced" to sell as a result of the merger. I recorded both as sales to
> reflect
> the gain and update my account cash balance..
>
> I assume the 104 shares were "exchanged" at the same value (like a company
> name
> change?). I did a remove and add shares valued at the same $109.+/share. I
> then
> updated the price as of November 30 to 137.29/share.
>
> I may not be footnoting my financial reports but I added plenty of memos
> to the
> transactions in case I later discover that this was incorrect.
>
> sb
>
> sharx35 wrote:
>
>> > Glad you brought this up.
>> >
>> > I'm in the same boat. Bought 150 shares of TransOcean in 2002 at
>> > $34.408/share.
>> > 104.94 of those shares became 104 shares of "new" TransOcean. 45.06
>> > shares were
>> > bought back at $109.9533955/share. Also received $125.96 cash in lieu
>> > for
>> > fractional share.
>> >
>> > I've tried a couple of scenarios, haven't been happy with any results.
>> > I'm pretty sure I "sold" the 45.06 shares for $109.+/share. Other than
>> > that I'm
>> > having trouble reconciling various sell/buy, remove/add, and merger
>> > transactions.
>> >
>> > Left a call for my broker today to get me the cost basis for the new
>> > shares and
>> > sort out gains. Looks like my cap gain is probably 45.06 x $109.... or
>> > $4,954.50
>> > + 125.96 for cash in lieu.
>> >
>> > I've never seen a "merger" quite like this one. Any finance/tax gurus
>> > want
>> > to
>> > jump in on this one?
>> >
>> > sb
>>
>> Well, here in Canada, my broker said that the share reduction amounted to
>> a
>> "deemed disposition" of those shares, for income tax purposes. That
>> recent
>> bulletin on the TransOcean website suggested that cost basis had to
>> allocated to the "redeemed shares" pro rata, in calculating cap g/l.
>> Technically easy. The problem is HOW to get Quicken to represent it all
>> properly. Or, with this be yet another example where I have to manually
>> footnote my financial reports?
>>
>> >
>> > sharx35 wrote:
>> >
>> >> Are there any TransOcean shareholders here who have ***correctly***
>> >> entered
>> >> the transactions relating to the reclassification of TransOcean's
>> >> shares
>> >> that occured about Nov. 28? (Every TransOcean shareholder received
>> >> .6996
>> >> shares of the "new" TransOcean in exchange for 1 of the "old"
>> >> TransOcean
>> >> shares. They also received $33.03 for each of their old shares. If the
>> >> calculation resulted in them being entitled to a fractional share,
>> >> they
>> >> were
>> >> paid out for that fractional share on about Dec. 11. This whole thing
>> >> related to a takeover/merger with GlobalSanteFe. The key here is to
>> >> end
>> >> up
>> >> with the PROPER adjusted cost basis for the NEW shares and the proper
>> >> realized capital gain/loss. According to a recent news release from
>> >> TransOcean, cost basis must be allocated to the "removed" shares on a
>> >> proportional basis. The various statements from my broker, both in
>> >> writing
>> >> and on-line, indicate that the new cost base for the reclassified
>> >> shares,
>> >> at
>> >> least in my brokerage account may be borked. I'd be interested in
>> >> hearing
>> >> from someone who has solved all aspects of this problem involving
>> >> posting
>> >> all this in Quicken: the reduction in the number of shares and the
>> >> proper
>> >> calculation of the cost basis of the new shares.
>> >
>
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