I intend for a Turbotax Live expert to complete my return but the phone line recently told me they would not calculate my basis for me. Unfortunately, this is my major problem. Added to this, I am a tax accounting noob. I invested $25,000 into a convertible note with private company A about two years ago. In December 2021, A merged with public company B. The merger terms stated that A shareholders would receive half cash which was $10.89 and half stock which was 0.39673 shares of B (at $27.4432/share) for each share of A. I would also receive additional cash and B shares as A's products improve and contribute to B's bottom line. This means that my current situation will probably recur.
I received a 1099-B that listed in box 1D the proceeds of $35,794.95, box 2 "type gain or loss undetermined," box 5 "this is a noncovered security," box 6 "reported to IRS: gross proceeds," box 12 "basis not reported to IRS." I contacted the issuer and they would not give me any more information. I received a statement from Computershare saying I had received 1,338 shares of B. My note had converted to A shares instantly at the merger and then swapped for B shares and cash so I had not received any A shares. However, working backwards from the 1,338 B shares, I calculated that my note converted to 3372.57077 shares of A. I don't know how I should round off the decimals.
I also received a Form 8937. Someone I talked to advised me that I would not owe taxes on the B shares until I sold them. The Form 8937 said that the holder of one share of A would recognize income equal to the lesser of a) $21.78 minus my basis in that A share and b) $10.89. It also said that my basis in the 0.39673 B shares received would equal my basis in one share of A minus $10.89. I don't know how to calculate the basis or what the Turbo expert will want to know. I filed for an extension and paid what I would owe if the entire proceeds were taxed at the long-term capital gains rate. I hoped that would be sufficient. Any help here on calculating the basis and what I might owe in taxes on this? What will be my basis on cash and B shares if I receive more in the future? Thank you!
