On 11/1/17 level 3 communications was bought by ce...
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On 11/1/17 level 3 communications was bought by century link. my l3 shares were converted to ctl. the irs has considered the sale to be taxable. is this right?

 
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Level 15

On 11/1/17 level 3 communications was bought by century link. my l3 shares were converted to ctl. the irs has considered the sale to be taxable. is this right?

If the broker showed the sale on the form 1099-B then you had to report it on the return ... so if the IRS sent you a CP2000 for the missing info then complete the missing 8949 & Sch D and send them in to refute the IRS determination that the entire sale was taxable. 

Anonymous
Not applicable

On 11/1/17 level 3 communications was bought by century link. my l3 shares were converted to ctl. the irs has considered the sale to be taxable. is this right?

U.S. Federal Income Tax Consequences to U.S. Holders

Assuming the receipt and accuracy of these opinions, a U.S. holder of Level 3 common stock will generally recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of gain realized (i.e., the excess, if any, of the sum of the amount of cash (other than cash received in lieu of a fractional share of CenturyLink common stock) and the fair market value, as of the effective time of the combination, of the CenturyLink common stock received in the combination over that stockholder’s adjusted tax basis in its Level 3 common stock surrendered) and (2) the amount of cash received in the combination.

Notwithstanding the above, in certain circumstances, if a U.S. holder of Level 3 common stock actually or constructively owns CenturyLink common stock other than CenturyLink common stock received pursuant to the combination, the recognized gain could be treated as having the effect of a distribution of a dividend under the tests set forth in Section 302 of the Code, in which case such gain would be treated as dividend income. Because the possibility of dividend treatment depends upon each holder’s particular circumstances, including the application of constructive ownership rules, U.S. holders of Level 3 common stock should consult their tax advisors regarding the application of the foregoing rules to their particular circumstances.

The aggregate tax basis of any CenturyLink common stock received in the combination by a U.S. holder (including any fractional shares deemed received and exchanged for cash) will be equal to the U.S. holder’s aggregate adjusted tax basis of the Level 3 common stock surrendered in the combination, reduced by the amount of any cash received by the stockholder in the combination (excluding any cash received in lieu of fractional shares of CenturyLink common stock) and increased by the amount of any gain recognized by the stockholder (excluding any gain recognized with respect to cash received in lieu of fractional shares of CenturyLink common stock) on the exchange (including any portion of the gain that is treated as a dividend as described above). The holding period of any CenturyLink common stock received in the combination by a U.S. holder (including any fractional shares deemed received and exchanged for cash) will include the holding period of the Level 3 common stock surrendered in the merger.

If a U.S. holder of Level 3 common stock acquired different blocks of Level 3 common stock at different times or at different prices, any gain or loss will be determined separately with respect to each block of Level 3 common stock and such holders’ basis and holding period in its shares of CenturyLink common stock may be determined by reference to each block of Level 3 common stock. Any such holder should consult its tax advisors regarding the manner in which cash and CenturyLink common stock received in the combination should be allocated among different blocks of Level 3 common stock and with respect to identifying the bases or holding periods of the particular shares of CenturyLink common stock received in the combination.

Any recognized gain will generally be long-term capital gain if the U.S. holder’s holding period in the Level 3 common stock surrendered is more than one year at the effective time of the combination. Long term capital

 

http://www.snl.com/Cache/c38013629.html#rom282157_90

 

this was info that was filed with the SEC as determined by the companies not the IRS.

 

 

as a holder of Level 3 you should have received notification of the merger and other important info including a proxy to approve or disapprove of it.  The tax consequences as above would have been included.   even if you submitted your proxy not approving the merger, it's majority rules and the majority voted for the merger.    the companies would then have informed all brokers holding L3 in street name of how to report on 1099_B and to the IRS. 

 

 

 

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