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posted Oct 1, 2022 1:50:21 PM

How to handle reverse merger while paying tax? $4500+ loss but robinhood tax-documents completely ignored the detail instead showed it as a profit. Please help.

Response from Robinhood: 
On May 26, 2020 Ritter Pharmaceuticals (RTTR) performed a 1 for 25reverse split and changed its ticker symbol to QLGN (Qualigen). This means shareholders will now hold 1 share of QLGN for every 25 shares of RTTR previously held. Fractional shares will be paid as cash in lieu. Additionally, shareholders will receive a contingent value right (CVR),which pays additional cash if the company hits certain milestones.
You can use your Robinhood brokerage account statements as evidence of this corporate action for tax purposes, but please check with a tax advisor to confirm which form to use.

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1 Replies
Level 15
Oct 1, 2022 1:56:51 PM

Not sure what your issue is ... did you sell the new stock yet ?   Only thing you need to report on the return is the fractional share that was sold and usually you will leave a zero cost basis for that transaction and leave all of the basis with the stock you still own thru the reverse merger.  

 

For instance if you owned 25 shares of the old stock for $1 cost basis each for a total of $25  then you now have ONE share of the new stock with a $25 cost basis.  Until you sell the new stock you have not realized any loss so nothing is reported on the tax return.