micha8st t1_j6o3aum wrote on January 31, 2023 at 6:25 PM

I've never dealt with this with a private company, but I've dealt with this before.

Who's issuing the cash payments? I'm asking about the Aug 2022 payout.

5k / 5k sounds right, at first glance, but it's not clear where that 400 came from. It sounds like a cash dividend...but it should be reported on a 1099-DIV in that case. Unless they formed a partnership, and if that's what happened, you can expect a K-1 towards the end of March.

micha8st t1_j6o5c9j wrote on January 31, 2023 at 6:38 PM

my worst case for this sort of thing is AT&T. And it's really bad.

My grandparents bought AT&T before the breakup of Ma Bell.

I think they split off a few of their shares into an UGMA ostensibly to pay for my college.

I graduated college in the late 80s. I learned of the UGMA back in the mid-90s. Grandma decided it wasn't fair to give me all the money and my brother none, so it was split in half and then transferred to me.

At the time of the transfer, I received AT&T, BLS (one baby bell), Lucent, and a mutual fund that I think was used to capture dividends.

AT&T spun out AT&T wireless (AWE), which got bought out by BLS and SBC communications to form Cingular.

BLS bought AT&T.

Lucent spun out several companies, and what was left merged with Alcatel and then bought by Nokia.

Somehow I got ownership in Comcast as a result as well.

In many cases, I had to sell fractional shares as a result of different M&A activites.

at home I've got a big spreadsheet and one tab tracks where all the little pieces of AT&T went.

I've come to the conclusion that consistency is what is needed. THe big question in my mind is that $400.

recycled_dnd OP t1_j6o5eur wrote on January 31, 2023 at 6:38 PM

>Who's issuing the cash payments? I'm asking about the Aug 2022 payout.

A third party bank that handled the sale/merger called PNC Financial Services

>but it's not clear where that 400 came from.

Yeah the other person I know who was invested in the company doesn't know either. I still have the paperwork from the $400 payment and it just says:

"REMITTANCE DETAILS

This payment has been issued as as part of the transaction below:

Company B - Company A"

>Unless they formed a partnership

Company B bought Company A outright, their operations are being integrated into Company Bs and company A "no longer exists" it's employees were absorbed into Company Bs or terminated

micha8st t1_j6o77pl wrote on January 31, 2023 at 6:49 PM

I've been involved in two M&A where a public company was bought by another public company, and part of the deal was cash -- in both cases we got a cash lump they called a "special dividend" plus stock in the purchasing company.

One is my employer, so for privacy reasons I won't give you any info there.

The other is Terra Industries being bought by CF Industries. I can get back to you tonight with how I handled both of those. I think in both cases the guidance we received was that the cash dividend was treated as a dividend, and 100% of the basis in the little-fish ended up in the basis for the big-fish.

recycled_dnd OP t1_j6o7qyn wrote on January 31, 2023 at 6:52 PM

Thank you for your replies!

Upset-North-2211 t1_j6o9xix wrote on January 31, 2023 at 7:06 PM

I would split the investment into 2 chunks $5k each and use 1 chunk against the $7.5k cash payout. Hold the 2nd $5k as the cost basis of the received stock. The $400 payout is like a dividend, so cost basis is $0.