For the Johnson Controls/Tyco merger, do you have to pay capital gains taxes on the fair market value of the shares before the merger, or just on the cash received?

[deu123]

Before the merger, I had 277 shares of JCI; after the merger and the cash received, I still had 232 shares of JCI. The 1099-B lists the proceeds sold as 240 shares, the number of shares originally purchased.

[TomYoung]

"For the Johnson Controls/Tyco merger, do you have to pay capital gains taxes on the fair market value of the shares before the merger, or just on the cash received? "

Really, the answer is "none of the above."  You proceeds from the sale is the fair market value of the 231.4889 shares you received (277 x 0.8357) plus the cash received.  From that you subtract the basis of your 277 shares. 

I'm certain that the 1099-B is not listing as "proceeds" your original number of shares.  Your original shares and all the shares acquired after that - dividend reinvestments? -  constitute the basis of what you sold.

Tom Young