- quote -

Thanks for the reply, Bruce.

Getting information has been the problem. In the past I
have always received information from the company involved
in a merger, spin-off, etc. as to how to allocate the costs.
Not this time. All I received was a monthly statement from
my broker (April 1993) showing an exchange of $xx cash, and
n shares of the new ATT Canada, which quickly changed their
name to Allstream, and recently merged with Manitoba
Telecom. I have no idea the value of the stock at the time
of the exchange. I don't thing it was even trading on the
stock market at the time.

I did receive a document in Jan. 2003, from the bankruptcy
court that explained the settlement and went into some
detail of tax implications for Canadians, but very little
for Americans. It did say that in the U.S., when the new
stock was sold, one would need to use the adjusted basis of
the stock, but offered no clue as to what that might be or
how to calculate it.

Before posting here, I tried my broker. That was useless.
They could only suggest that I consult my tax advisor. AT&T
of Canada no longer exists. I called Allstream of Canada
but since their merger with Manitoba Telecom they no longer
have a investor relations department and referred me to
Manitoba Telecom. Several calls to Manitoba Telecom have
not produced anyone who has historical data on the old AT&T
Canada Co. or knows anything about the bankruptcy
settlement. I seem to be at a dead end.

- quote -

I suppose I could sell the stock before the end of the year,
otherwise the carryover loss that I probably should not have
taken will offset other gains this year, which probably
would not be good since I shouldn't have the loss in the
first place.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

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Ernie Klein <eckleinspammenot[at]pacbell.net> wrote:

- quote -

Yes, that's the one.

The paperwork you were sent in connection with these
trasnactions should allow you to allocate the portion that
was involved in the payout and the portion that was involved
with issuing of new stock.

- quote -

Nope. You received a 1099-B which is a pretty fgood
indication that you had a taxable trasnaction involved there
ad you did receive cash.

Unless the 1099-B called this a partial liquidation, in
which case you treat the cash received as a return of
capital.

- quote -

Still, amend.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

Well..

First, you should have allocated your costs between the bond
and the stock that you received. The company web site qould
probably be able to give you the information you need to do
that That would have placed some basis in the stock.

Having said that. You could just report the sale of the new
shares with a zero basis and then apply the gain against
your carryover. That will probably wash it out.

Your choice.
Bruce Raskin, CPA
braskincpa[at]aol.com
Small Business and Individual Tax and Accouting Services

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"Ernie Klein" <eckleinspammenot[at]pacbell.net> wrote:

- quote -

Looks like option B is correct.

According to IRS Pub 550, gain or loss on exchange of stock
during a corporate reorganization (including bankruptcy) is
not recognized (page 45). This may be true for conversion of
bonds to stock in a corporate reorganization also (p 46).
Gain is recognized to the extent of cash or other property
received, no loss is recognized. The basis in the new stock
is the adjusted basis of the bonds decreased by any cash or
other property received.

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I posted the following problem a while ago, hoping that
someone might point me in the correct direction, but since I
received no response, I am trying again.
-----------------

During 2001, on (bad) advice from my (ex)broker, I invested
in some AT&T Canada bonds. During 2002-2003 AT&T Canada
went belly-up and when they emerged from bankruptcy in 2003
with a new name, Allstream, I received cash settlement and a
few shares of stock in the Œnew¹ Allstream company, the
total being a very small portion of my original investment.

My (ex)broker sent me a 1099B that showed my gross proceeds
for the bonds, which I entered on my 2003 Sched. D, for a
large loss. I didn't consider the few shares of Allstream
stock at all.

Recently, the new company, Allstream, merged with Manitoba
Telcom and my Allstream stocks turned into Manitoba Telcom
stocks. I questioned myself as to just what was my basis
in the Manitoba stock, if anything at all, because of my
2003 schedule D actions, I don¹t seem to have any basis -
which doesn¹t seem right.

Now I think that either:

A) I should have taken a 2003 loss only to the extent of the
proportion of the loss that the cash settlement represented
and assigned the remainder to the loss to the basis of the
Œnew¹ stock to be taken if and when I sell the stock.

or B) I shouldn¹t have taken ANY loss in 2003 at all, and
simply have reduced my original basis in the bonds by the
amount of the cash settlement, and then applied that basis
to the stock received (i.e. a simple transfer of assets). I
would then take the entire loss if and when I sell the
stock.

I¹m not quite sure which (if either) is the correct way, but
I tend to lean toward ŒB². Any ideas?

BTW amending my 2003 return, no matter which way, will have
no effect on my tax liability because this loss wouldn't
make any difference, only the carry over amount would be
changed.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

During 2001, on (bad) advice from my (ex)broker, I invested in some AT&T
Canada bonds. During 2002-2003 AT&T Canada went belly-up and when they
emerged from bankruptcy in 2003 with a new name, Allstream, I received a
cash settlement and a few shares of stock in the Œnew¹ Allstream
company, the total being a very small portion of my original investment.

My (ex)broker sent me a 1099B that showed my gross proceeds for the
bonds, which I entered on Sched. D, for a large loss. The thought that
the few shares of stock that I had received, wasn¹t included in the
gross proceeds shown on the 1099B, didn¹t cross my mind at the time.

Recently, the new company, Allstream, merged with Manitoba Telcom and my
Allstream stocks turned into Manitoba Telcom stocks. I questioned
myself as to just what was my basis in the new stock, if anything,
because of my 2003 actions, I don¹t seem to have any basis at all- which
doesn¹t seem right.

My current thinking is that either:

A) I should have taken a 2003 loss only to the extent of the proportion
of the loss that the cash settlement represented and assigned the
remainder to the loss to the basis of the Œnew¹ stock to be taken if and
when I sell the stock.

or B) I shouldn¹t have taken ANY loss in 2003 at all, and simply have
reduced my original basis in the bonds by the amount of the cash
settlement, and then applied that basis to the stock received (i.e. a
simple transfer of assets). I would then take the entire loss if and
when I sell the stock.

I¹m not quite sure which (if either) is the correct way, but I tend to
lean toward ŒB².

BTW amending my 2003 return, no matter which way, will have no effect on
my tax liability as losses didn¹t make a difference, only the carry over
amount would be changed.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

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