|
Posted by joeu2004 on February 8, 2008, 9:26 am
Please log in for more thread options
PS....
> my recollection is that cash-in-lieu associated with the
> acquisition of Lucent Technologies (years ago) was officially
> treated as a reduction in cost basis of the remaining shares
> (i.e. taxes deferred).
In my previous response, I said, "No, it wasn't". Well, it certainly
wasn't "taxes deferred".
But as to a "reduction in cost basis of the remaining shares",
you and I might be in "violent agreement", depending on exactly
what you meant.
Interestingly, the Alcatel-Lucent Tax Basis Worksheet that I
referred to previously fails to say what effect, if any, reporting
the gain (loss) from the "fractional sale" (their words) has on
the total tax basis of the remaining shares.
But yes, as I mentioned previously, if you report the gain
(loss) from the sale of fractional shares (cash-in-lieu), the
basis of those fractional shares do reduce the __total__ basis
of the remaining whole shares -- just as any sale does.
To refresh your memory again, it might be helpful to show
how the Alcatel-Lucent Tax Basis Worksheet computed the
total and per-share basis. It should sound familiar ;-),
referring to my previous explanation.
1. 100 Number of Lucent shares owned (single purchase)
2. $ 3.00 Tax basis per Lucent share
3. $300.00 Total basis of Lucent shares
4. 19.52 Total Alcatel-Lucent shares received
(#1 * 0.1952)
5. $300.00 Total basis of Lucent shares (#3)
6. $ 15.37 Divide total basis by number of Alcatel-Lucent
shares (#5 / #4)
7. $ 15.37 New tax basis per Alcatel-Lucent share
Their worksheet fails to explain that $300 is also the total
basis of the 19.52 shares of Alcatel-Lucent shares, which
includes the 0.52 fractional shares. That should be obvious
(see step #6), but perhaps not to some people.
Since $300 is the total basis of 19.52 shares, and 0.52 shares
are reported sold with a computed basis of $7.99, the basis of
the remain 19 shares is $292.01 (300 - 7.99).
And yes, to that extent, reporting the gain (loss) from the sale
of the fraction shares (cash-in-lieu) does indeed result in a
"reduction in cost basis of the remaining shares" -- as I
explained previously.
Nothing particularly magical about that, which is probably why
it was not explained in detail in the worksheet.
HTH.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
|
|
Posted by dapperdobbs on February 8, 2008, 2:45 pm
Please log in for more thread options
> Interestingly, the Alcatel-Lucent Tax Basis Worksheet that I
> referred to previously fails to say what effect, if any, reporting
> the gain (loss) from the "fractional sale" (their words) has on
> the total tax basis of the remaining shares.
>
Oops. Just to clarify, I didn't mean to disagree or invalidate your
computations for the proprtional cost basis. Perhaps I was thinking of
some other merger. The Lucent-Alcatel pdf file wouldn't open for me
(perhaps a download only), but the AT&T spin-off of Lucent (1996)
material contains this quote as regards the fractional share portions:
"The taxable gain or loss that must be recognized for income tax
purposes will be equal to the difference between the cash received and
shareowner's tax basis in the fractional share (you can determine your
tax basis using the worksheet that follows)."
So again, not an intent on my part to question what you posted, and
thank you for your clarification.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
|
|
Posted by MyVeryOwnSelf on February 8, 2008, 9:36 pm
Please log in for more thread options >> My broker reports the $18.00 as a sale with zero basis on
>> my monthly statement.
> That is a common practice. You have the choice of ignoring
> that and doing the "correct" thing. Or you could simply follow
> your broker's practice, especially if you have a written statement
> to that effect.
>
> If you go the zero-basis approach, be sure to adjust the
> arithmetic above. That is, allocate 301 shares of XYZ to the
> various lots, and keep the full original basis with each lot.
Also, bear in mind that the monthly statement is one thing, but the 1099-B
form is another.
Most likely, the broker won't report the $18.00 as a capital gain on form
1099-B. But if they do, it's more of a hassle for you to keep your records
differently. The IRS gets copies of the 1099s. So if something is reported
on 1099-B, I try to have a corresponding line on Schedule D (Form 1040),
which seals the issue of how to track the amount from then on. There are
various reasons, though, why something might appear on Schedule D but not
on a 1099, this being one of them.
(Disclaimer: I'm not a tax pro.)
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
|
|
Posted by joeu2004 on February 9, 2008, 12:11 am
Please log in for more thread options > Most likely, the broker won't report the $18.00 as a capital gain on
> form 1099-B. But if they do, it's more of a hassle for you to keep
> your records differently. The IRS gets copies of the 1099s.
The 1099-B reports sales proceeds (gross or net commissions
and fees, at the broker's discretion), not capital gain (loss) or
basis. Even though brokers send us ad hoc 1099B's that might
contain ancillary information, I believe they must use the official
red scannable 1099-B to the IRS.
(Before you point to Box 8, be sure to understand what it is for.)
So if something is reported
> on 1099-B, I try to have a corresponding line on Schedule D (Form 1040),
> which seals the issue of how to track the amount from then on. There are
> various reasons, though, why something might appear on Schedule D but not
> on a 1099, this being one of them.
>
> (Disclaimer: I'm not a tax pro.)
>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
> << are atwww.asktax.org. >>
> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>
========================================= MODERATOR'S COMMENT:
When replying, please delete from the post to which you respond everything
except those portions to which you respond, and what is necessary to give
context. Write your response immediately below the portion of the prior
post to which is applies.
Thanks for your assistance.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
|
| Similar Threads | Posted | | fractional shares | April 19, 2008, 3:11 pm |
| taxability of cash-in-lieu? | April 19, 2006, 12:38 am |
| How to report cash in lieu on Schedule D | April 3, 2007, 7:04 pm |
| Cash in lieu of stock basis? | April 5, 2008, 12:01 pm |
| Trading LLC shares | February 25, 2007, 12:40 am |
| IRA distribution in shares of stock. | November 4, 2006, 10:35 pm |
| LLC and "selling shares" tax information | January 19, 2007, 8:25 pm |
| sale of treasury shares | February 13, 2008, 11:28 am |
| Re: K1 For shares sold short | March 22, 2008, 12:02 am |
| how do I sell my business shares in s-corp? | February 12, 2007, 7:35 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap