In 2013, I bought 600 shares of Lorillard (LO), cost basis ~$29,000.
Last week, it merged with Reynolds, and i received -- for every share of LO I owned -- $50.50 in cash. and 0.2909 shares of RAI. So I got:
- 74 shares of RAI (stock price = ~$72, so value of stock I got was ~$12,500), and
- $30,300 cash.
What's the tax treatment?? Do I have to declare a capital gain (of ~$13.8K) on the 'disposition' of the LO even though I never really wanted to dispose of it? What's the cost basis for the shares of RAI I now own?
Tax implications of merger - am I req to take a cap gain?
Moderator: Mark T Serbinski CA CPA
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