RICE EQT Merger and tax treatment

[amits-ny]

I had 50 RICE stocks. After Merger I got 265 in cash and 18.5 shares of EQT. My original tax basis of short term 1064.00. My 1099B shows only one line for sale of 50 RICE for sale of 265 and cost basis 0. How does this work?

[TomYoung · Accepted solution]

You enter it exactly as it reads.  Your real economic gain was more than that

(50 x $5.30) + (18.5 x $64.58) - $1,064.00 = $395.73

but in this case you recognize the lower of your real gain or the cash received.  Since the cash received was $265 that's also your reported profit.

Your basis in the 18.5 shares received is $1,064.00 - $265 (cash) + $265 (gain) = $1,064.00

You can (should) report a basis of ($1,064) / 18.5 x .5 = $28.76 associated with the cash in lieu.  You subtract that from the $1,064.00 for a remaining basis of $1,035.24.

Tom Young

[amits-ny]

Thanks !!