"John C. J." <cjannis[at]REMOVENOSPAMoffline.ro> wrote:

- quote -

Thank you all very much for your input.
Very professional and helpful.

Costa

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"John C. J." <cjannis[at]REMOVENOSPAMoffline.ro> wrote:

- quote -

There is a good worksheet on the Washington Mutual website
that will walk you through the calculations. You will have
to determine what portion (if any) of the cash you received
is a return of capital and what portion needs to be reported
as short or long term capital gain.

Ira Smilovitz

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"John C. J." <cjannis[at]REMOVENOSPAMoffline.ro> writes:

- quote -

Assuming this is a standard tax-free merger with boot (the
cash), it goes like this:

(1) Compute your basis in the PVN stock.
(2) Compute the total value received (i.e. the total
value of the cash and WM stock on the day the
merger closed).
(3) Subtract value received from basis to get your
*economic* gain.
(4) If the "economic gain" is less than zero, none of
the cash is taxable.
(5) If the "economic gain" is more than the cash received,
all of the cash is taxable (as a capital gain).
(6) If the "economic gain" is in between, only the amount
of cash equal to the "economic gain" is taxable (as
a capital gain).
(7) Your basis in the WM stock is your basis in the PVN stock
minus the cash received plus the amount of the cash that
was taxable.

In your specific example, the basis was $9490. The value
received was $2000 + (400*$23.725) = $11490. The economic
gain is $2000. Therefore the entire $2000 received is
taxable and your basis in the WM is $9490.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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I held for a while 1000 PVN shares bought [at] $9.49/share.
On 3-Oct-05 PVN merged or was bought by WM.
The deal was $2 per 1 PVN share, and
0.4005 WM shares per 1 PVN share.
Therefore, after the merger I received $2000 cash,
and 400 WM shares [at] $23.725/share.

Would you please help me figure out:
- if I have to report and how to report the $2000 cash
- how to report and figure out WM cost basis

Thank you very much
Costa

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >