GeorgeM777
Expert Alumni

Investors & landlords

Yes, you adjust your basis lower based on the cash received.  You are correct in that you cannot report the loss from the merger on your tax return but neither do you have to pay tax on the cash received.  Instead, the cash received reduces your basis in the new stock.   All of this assumes that your original basis was greater than the total compensation received, that is, the stock and cash you received in the merger. 

 

@EH1 

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