This Express Scripts deal is very tricky.... Here is additional information to help you once you determine your original cost basis of shares purchased and how to recognize gain and new basis.
https://www.cigna.com/assets/docs/about-cigna/form8937.pdf
a U.S. holder that receives a combination of New Cigna common stock and cash in exchange for shares of Express Scripts common stock pursuant to the Express Scripts merger generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the excess of the sum of the fair market value of New Cigna common stock and cash received over such U.S. holder’s tax basis in the Express Scripts common stock surrendered and (2) the amount of cash received by such U.S. holder;
- the aggregate tax basis of the shares of New Cigna common stock received pursuant to the Express Scripts merger will be the same as the aggregate tax basis of the shares of Express Scripts common stock surrendered in exchange therefor, decreased by the amount of cash received, and increased by the amount of gain recognized on the exchange; and
- the holding period of the New Cigna common stock received pursuant to the Express Scripts merger will include the holding period of the shares of Express Scripts common stock surrendered in exchange therefor.
The FMV of the shares received I have used to be $182.185/share using the avg. value trading which I checked is also the value my broker used... Using that valuation for the shares received:
If your basis per share in ESRX for any lot exceeded 93.09 , you incur no capital gain taxes for those lots.
If your basis per share in ESRX was less than $44.34, your actual capital gains exceed $48.75, so the capital gain tax liability is limited to the $48.75 cash received.
If your basis is between those two values (44.34 and 93.09), some of the cash received (48.75) is deemed to be taxable capital gains.
Example:
1.So Let's say you had 100 shares of Express Scripts at $22 a share cost basis of express scripts: Since your cost basis was less than $44.34, you would recognize all the cash received as capital gains and your basis in your new shares would be $2200.
2. 100 shares at $75/share. Since your cost basis fell between, you are selling your shares for $93.094 per share proceeds, and taking a gain of 18.094/share. Your new shares received total basis is now $4,434.40.
3. 100 shares at $112/share. Since your cost basis is higher, you can not take a loss so you recognize no gain or loss and allocate $48.75/share as your cost basis and no gain/loss. Your new basis is now $6,325
Do note, this is the avg. price we used for new Cigna. The defined share ratio 0.2434 and the defined cash $48.75 per share means each Expess scripts share received valued at 0.2434 * 182.185 + 48.75 = $44.34 + $48.75 = $93.09/share. If you use a different value for the Cigna fair market value received, your calculations will be different.
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