how to report stock shares exchanged please?

[WITAXLADY]

CH2M and Jacobs merged

Taxpayer shows  Exchange of 504 SH of CH2M common stock for $$$

also shows Exchange of 1,034 SH of CH2M Hill PDSPP stock for $$$$  all on Dec 15, 2017 - no basis for either

and then exchange of 14 SH of CH2M Hill PDSPP stock D

Please what do I show on the 8949?

Nothing until sold?

Thank you so much!

[Catherine]

There should be a web site with information on the merger.  I goggled it (sic) and got a pdf:  link is US-Tax-Information-On-CH2M-Acquisition-Form-8937.pdf and it gives their estimation of basis and how to figure it.

[SaraEA]

The original post says an exchange for $$$$.  If exchanged for cash, it's a sale.  If exchanged for the new stock, nothing is reported except cash received for partial share (when the exchange equals something like xxx.33 shares, cash will be paid for the .33).  Okay to report that with no basis, since it will usually be minimal and allows for the new shares to retain the original basis of the old.  This client has to find out the original basis, because it will become the basis of the total number of new shares.  Catherine's link should help determine what the new per share basis is, but the starting point is the old basis.  If dividends were reinvested, those get added to the old basis.  Have fun!

Actually, I've been handing these messes to the broker and asking him/her to calculate it for the client.  They have the fancy software to look up CUSIPs.  It's hard to find historical prices for stocks that no longer exist without the data they can access.

[WITAXLADY]

good help - thank you!

I had googled that is why I knew they merged..

I am asking if they actually received cash.. might have as they paid large April payment due to large stock windfall...

D

[Catherine]

14 hours ago, SaraEA said:

They have the fancy software to look up CUSIPs.  It's hard to find historical prices for stocks that no longer exist without the data they can access.

Having a broker to call for these is wonderful and has saved my bacon a couple of times.

[jklcpa]

Be careful with this one because there are different options that the existing shareholders could elect.  In the SEC filing on 8/1/17, please see Article 2 - "Conversion of Securities in the Merger" that contains details of these transactions, the options available to shareholders, fractional shares and more.

Same info is found in this document that Catherine found, please see page 3 at "Part II, 14" : https://s1.q4cdn.com/838591571/files/doc_downloads/governance/2018/US-Tax-Information-On-CH2M-Acquisition-Form-8937.pdf

More info for investors is here from the company website post-merger, updated in Feb 2018 with additional info in Q & A format.  Section 5 - Tax Reporting starts on page 8 that should help you most, including where to find stock FMV price and the link to computershare for cost basis info: http://s1.q4cdn.com/838591571/files/doc_downloads/CH2M/FAQ/ch2m-jacobs-post-closing-frequently-asked-questions-020818.pdf

 

 

[WITAXLADY]

so she did get the 40/60 with shares and cash...

 

I would just do nothing with shares? or show as same $$4 amount?

and cash is cashed in as normal - correct - just have to figure out how many for what basis, correct?

[WITAXLADY]

ok - so client gives me $$ of cash she received and notes - 40/60 cash received vs invested -

the short term amounts match - yay

the long term do not -

can I assume the CH2M stocks are what were cashed and the Jacobs were what were then exchanged?

The cash reported  is more than the 40% amount she should have received

The Jacobs reported is still more than 60% of the cash received

ie - rec $60,000 cash, CH2M stocks reported are $50,000

40/60 - Jacobs would be $96,000, exchange/shows $105,000 sold? but not received..

Thank  you

[jklcpa]

@WITAXLADY I merged your latest post on this same topic, now shown directly above

[WITAXLADY]

thank you -

I have read through the above articles...

I need help Please...

I do not know what to do with all the transactions..

It is a mixed consideration - part cash and part stock - so I have the basis per each share of CH2M and I know how to report the ones she received cash for.. I get that

But what do I do with the ones reported as exchanged for each stock so it does not create a taxable event -

Thank you or email me separately? [email protected]

[jklcpa]

This is the way I understand how to report a merger that includes both stock and cash -

1. Calculate the overall gain by comparing what was received (FMV of new shares plus cash) to cost basis of shares given up
2. The amount of gain to report is the lesser of the total gain or the amount of cash received
3. Basis in the new shares received is the basis in old shares, increased by the gain reported, decreased by the amount of cash received.

This is done in total at first, but then must be broken down by lot and by short- and long-term.  The following article should be helpful as it has detailed examples of three scenarios: one where overall gain is more than total cash received, second one where overall gain is less than total cash received, and the third where no gain is reported.  It also has detailed illustrations of splitting this into short- and long-term by the length of time each lot was held. https://www.schwab.com/public/file/P-8936138/spt010960.pdf

Each of the named groups (CH2M, CH2M PDSPP, and CH2M PDSPP stock D) should each be treated separately since they have different designations, and some were purchased through a payroll deduction plan.

I hope some of that and the linked article helps.

[WITAXLADY]

thank you so much! -

I will look into it!