Viewing a single comment thread. View all comments

micha8st t1_j6o77pl wrote

Reply to comment by recycled_dnd in Investment in Private company that was bought out, 1099-B can't determine cost basis by recycled_dnd

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.

2

recycled_dnd OP t1_j6o7qyn wrote

Thank you for your replies!

1

Upset-North-2211 t1_j6o9xix wrote

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.

2