For simplicity I'm using an example.
Company A is a US based company and company B is an International company.
Company A merges with Company B.
I own 1 share of company A with a cost basis of $1 and the share is worth $2 on the day of the merger.
The two companies merge, my investment firm sells my share of company A and purchases a share of company B - let's assume share's are dollar for dollar.
I end up with 1 share of company B worth $2 and my new cost basis is $2.
I'm told I have a taxable gain of $1 and the full amount is capital gains (long term gain) to be declare on this years income tax and this was done this way because it's a US company merging with an international company. Is this correct? Can you point me to the IRS publication describing this please?
In the past I have been involved in mergers of two domestic companies and my shares simply transferred from one company to the other without any tax implications instead of being forced to sell and purchase shares like this...
The stock ticker symbol even remained the same as is was for company A.
Thank you.
