How do I compute cost basis for 16 shares of TWC that I owned in May 2016 and then were exchanged for 7 shares of Charter Communications shares?

[romileyb]

Originally we had purchased 50 shares of AOL in Feb 1999 which went through several mergers and in early part of May we had 16 shares of TWC stock which was exchanged for 7 shares of Charter Communications stock

[MichaelL1]

See detail below, your basis in the 7 shares of Charter is: what you paid for the AOL stock, less the money you got on the merger with Charter, which would have been $115 X 16 ($1,840). 

You bought 50 shares of AOL and then they became 16 shares of TWC, is that correct?

If so, the cost basis of the 16 shares of the TWC is what you paid for the 50 shares of AOL in 1999. 

Time Warner effected a 1-for-3 reverse stock split on March 27, 2009, so the 50 shares would have become 16 shares. 

Generally, the aggregate tax basis of the Time Warner Inc. common stock equals the aggregate tax basis of the common stock held (excluding the portion of such basis allocated to the fractional share), and the holding period includes the holding period of the Historic TW Inc. common stock. 

source: http://ir.timewarner.com/phoenix.zhtml?c=70972&p=irol-faq_pf

So then if everything got exchanged to the 7 shares, then the cost basis of the 7 shares is what you paid for the AOL stock, less the money you got on the merger with Charter, which would have been $115 X 16 ($1,840).  See below for the detail. 

Charter Communications, Inc. announced that it has closed its previously announced transactions whereby, it has combined with Time Warner Cable Inc. Subject to the election described below, TWC stockholders will receive either $100.00 in cash and shares of common stock of the new public parent company, which has been named “Charter Communications, Inc.,” equivalent to 0.5409 shares of legacy Charter, for each share of TWC common stock (“Option A” consideration) or $115.00 of cash and Charter shares equivalent to 0.4562 shares of legacy Charter for each share of TWC common stock (“Option B” consideration). 

Source: http://www.schwabpt.com/public/file/P-9094313/SPT013597.pdf

Your purchase date will be the date in 1999.

[charliebabe28]

I do not believe the above answer is correct. I am in the similar situation from the shares that I bought of a oh well in the late nineties. The cost basis for your shares are more than just on the Charter Communication side. Back I believe in 2009 we also received shares of Time Warner twx and time Inc. Some of the cost basis has to go to those shares. Also in 2015 the remnants of AOL which you had received some stock of was sold to Verizon for cash you would had to have declared some of that in 2015. I paid over $14,000 for my AOL shares back in the nineties and my cost basis for my 7 shares of charter is only a little over $3,200. It is not 14,000. You would be in the same situation. It was very confusing for me and took me a number of hours to figure this out.

[MichaelL1]

If you did get shares of Time Inc and Time Warner twc back in 2009 then there would have to be an allocation made between the two companies for the shares of each.  If that is the case, you are correct, then the above answer would not be accurate, as that would need to be allocated under the terms at the time.

[charliebabe28]

I can't remember if there was an option to take cash instead of shares in Time Warner, Time Inc. I just let it ride and ended up with bits and pieces.  What I have been trying to figure out is if the cash portion of the time Warner Cable and Charter merger I received of $1600 is all taxable or if there is a cost basis how to figure that out. I am thinking that the entire $1600 is considered a gain and that the entire $3200 cost basis I had for the Time Warner cable stock before the merger is now the cost basis for the 7 shares of Charter.  What are your thoughts on this?

[MichaelL1]

The cash received for TWC shares can be considered a partial redemption (sale) followed by a merger or it can be treated as a reorganization where gain but not loss is realized and gain is limited to the cash received.  Take a look at this:<a rel="nofollow" target="_blank" href="https://www.iclub.com/faq/index.php?action=artikel&cat=1&id=526&artlang=en">https://www.iclub.com/fa...>

[charliebabe28]

I've seen that blog. It's also the same on investor website in the prospectus that I was sent. I still don't quite know understand what that means. If it's a partial Redemption what does that mean for the cost basis of the cash that was received verses how much of the cost basis goes with a 7 shares of Charter that I received?

[Kildare_4822]

I bought 100 sh AOL back in 1994, for 743.00 which expanded to 800 sh when Time Warner merger. I have been reporting the various mergers, etc spin off's etc and paying taxes on the spin offs at 100%. Now I have the resulting 266 shares of ATT and cash of over 14,000 and have  no idea re cost basis since now . I have  no clue re cost basis. I  assume it is not paying taxes on the over 14,305. .I still have 32 sh of Comsat that was spun off. All the spin offs I paid 100% as gains. but I dont want to pay tax on the 14305. Anyone know what my cost basis is?

[Kildare_4822]

Some error in post bought  100 sh April 1998 for 7554.00