On Mar 19, 7:04*am, martin lynch <odiegoo...[at]yahoo.com> wrote:
- quote -


These spinoffs are a headache. I don't know why the spinoff was sold
immediately. But you need to go back and reconstruct the spinoff
parameters. You need to find out how many shares of the spinoff stock
you get per share of the "mother" company you own. This way you may
get a different cost basis for the "mother" stock. This information
should be available from your broker. Then you need to find out why
the spinoff was sold immediately.

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In misc.taxes.moderated, martin lynch wrote:

- quote -

I would have expected that you would end up holding SFL and that you
would have only had sale of fractional shares (CIL -- Cash In Lieu).
If your broker is selling the whole thing, yes they would be sales
(as would CIL), and you would allocate the basis thru some means.
That would typically be allocated by using the prices of the two
stocks the next day. The open, closing, or average of high-low
work.

http://www.frontline.bm/IR/spinoff.shtml has some info. It looks
like the latest spinoff was in March 2007. They are nice enough to
provide some prices you might use in allocating basis.

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Looking through my 1099-B, I strangely found that I supposedly sold a
stock, which I never recalled purchasing in the first place. This
stock was SFL. Upon further research, I believe what I've discovered
is that a stock that I did own (FRO) apparently pays "dividends" by
spinning off shares of SFL to account holders (I believe SFL is a
subsidiary of FRO). The other strange thing is, the shares of SFL
seem to be automatically sold and the cash deposited into my account
(none of my statement show that I hold any positions in SFL).

So it seems this "dividend" is reported on my 1099-B rather than my
1099-DIV. Do I treat this as a stock sale, or as a dividend? If the
brokerage reports this gain on my 1099-B, I would assume I have no
choice but to report it as a stock sale, since then my numbers won't
match up with what was reported to the IRS.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >