What are tax consequences of this “reverse merger”?
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Returning Member

What are tax consequences of this “reverse merger”?

I owned shares of Johnson Controls Inc. before their “reverse merger” with Tyco last year.  I still hold all of my shares of the new Johnson Controls company, now named Johnson Controls International plc, from after the merger.  I received a 1099B showing proceeds of over $1,000. 

What are the tax consequences of this “reverse merger”?  Do I have to pay tax on the proceeds of $1,000 even though I never sold any of them and never received any of he proceeds in cash?


4 Replies
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Level 12

What are tax consequences of this “reverse merger”?

Did you receive a 1099-B for the reverse merger?  If so you have a reportable sale.
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Returning Member

What are tax consequences of this “reverse merger”?

Yes, I did receive a 1099-B.  And it indicates proceeds in Box 1d of over $1,000.  However, I never got an actual proceeds check from the Johnson Controls Inc. company when it merged with Tyco.  Instead I received shares in the new company, now called Johnson Controls International.  Isn't this unusual for a merger that is a tax event?  I have had companies that merged before and they never had a tax event.
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New Member

What are tax consequences of this “reverse merger”?

you should also have received shares from Adient.   my question is: can I use the amount on 1099 b box 1d as the new cost base for johnson controls international and Adien, since I did not contribute any new money for both companies.
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Level 12

What are tax consequences of this “reverse merger”?

This was an "inversion" and the income tax treatment you describe is exactly in line with transactions of that sort.

It's "as if" you were paid in cash for the old stock and then immediately turned around and bought the new stock with the cash.  If you still have the very thick document that explained the transaction to you look for a section titled "Material U.S. Federal Income Tax Consequences" or something similar and I'm sure that this methodology was explained there.

Tom Young


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