These transactions are somewhat complex and the way these sort of reorganizations work is as follows:
1)For EACH LOT of your stock that you gave up you need to determine gain or loss based on the "proceeds" of the sale (cash per share + FMV of stock received) vs. your basis in that lot. The holding period from the old lot of stock tendered carries over to the new lot of stock received.
2)Losses are NOT recognized in your tax return, nor are they "offset" against lots with gains.
3)Gains ARE recognized but only up to the LESSER of cash received or the gain as calculated per 1 above.
4)For each lot your basis in the stock of the acquiring company, (before addressing the Cash in Lieu issue), is: Basis in lot of acquired company tendered - cash received + gain recognized.
5)You then attribute, proportionally, basis from each lot of the acquired company to the fractional share and and RECOGNIZE gain or loss on the CIL transaction.
Having done all this you report the 1099-B cash received (excluding CIL) as your proceeds and derive a basis figure that gets you to the gain (short term and long term) that you derived in step 3 above.
The Form 8937 associated with this deal suggests $72.645 would be an appropriate value for the Heinz stock in this case.
If you have only one lot of stock to sell then the above instructions are not hard to execute. If you have multiple lots it gets more difficult.
If you are confused or simply want some help then state your lot information - date acquired, # of shares, basis - and I can give you the required entries.
Tom Young
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