I also have a question regarding the 01/08/2019 merger between Shire and Takeda. 1099B was issued by Citibank. The acquisition of the Takeda shares is shown as a loss but the cost basis of the sale of the Shire shares is shown as $0. I called Citibank but rep claimed no tax accountants are on their staff and work is contracted out. Does anyone know if this $0 cost basis is correct, Shire stock is originally from Baxalta and Shire merger on 06/03/2016.
The form 1099-B should show a sale amount and cost basis. Often, the cost basis is listed as -0- if the issuer of the form 1099-B does not have an accurate figure for that amount. The gain or loss is the difference between the sale amount and the cost basis.
If the form shows a loss but no cost basis, then the sale amount would have to be a negative figure. I don't think I have ever seen a negative sale amount listed, so I'm curious as to how the form 1099-B shows a loss?
The Baxalta / Shire merger occurred back in 2016 and you were supposed to report gain or loss on the transaction.
Look here:
for the proper accounting of that transaction which includes information about the basis of the Shire stock acquired.
I have the same situation with Shire --> Takeda. The Shire / Takeda merger was a taxable exchange. My shares originated back from Baxter in 2015. Schwab just sent out "corrected" 1099 now showing basis of $0 for the Shire shares. When I went back and reviewed the transactions involved, it seems that the payment that was made on Jan 22, 2019 from the Shire merger, more than covered my basis in Shire. That resulted in $negative cost basis for the Shire shares that were exchanged for Takeda. Schwab also added another line of long term gain for the amount of the Jan 22 payment that exceeded my Shire basis.
I think $0 basis is indeed correct, at least in my case. I'm not happy however cause I now need to do amended return!
The 1099-B proceeds should be showing the cash and fair value of Takeda shares received on January 8, 2019. The cost basis on the 1099-B should be the cost basis of your Shire shares exchanged. It is straightforward. I would call Schwab up and ask them to explain how the basis is zero. Also, the Takeda shares received should have a cost basis of the fair value ($19.025 per shr) on January 8, 2019, which is also used as a component of proceeds.
Summary of 1099-B details:
Proceeds = Cash rec'd ($90.99 per Shire Shr) + Number of Takeda Shrs rec'd x FMV price $19.025
Note: you received 5.034 Takeda shrs per 1 shr Shire
Cost Basis = Cost basis of Shire shares (look at your Dec 2018 Brokerage Statement)
Gain or (loss) = Proceeds less Cost Basis
When you call Schwab ask to speak to the Cost Basis Group located in Indianapolis. They are the experts.
In this case, I don't think it is as straightforward as normal. There was also a "contingent" payout from Shire on Jan 22 ($~86.18 / share) in addition to the Takeda stock received on Jan 10. So in this "taxable merger", I received $~95.77 in Takeda stock plus $86.18 in cash. My basis which goes back to Baxter was $~85.00 / share. So once you take into account the $86.18 in cash received, the Takeda stock was 100% gain, i.e. zero basis.
Schwab is showing two entries on the 1099-B, one for the Takeda stock received with $zero basis. The second entry shows the additional gain created by the contingent payout. I don't really like how they are showing it on the 1099, especially the way they are showing the cash proceeds portion but in total the gain is correct.
Call Schwab. I spent over an hour on the phone with the Cost Basis group walking through the details. Later in the morning, I got a callback and they think that I am right and the previous 1099-B was correct. They are investigating - nothing official at this time. Apparently, they started receiving calls yesterday from other people bewildered by the corrected 1099-B. My guess is that a new 1099-B will be issued reverting back to the previous 1099-B. At the time the person I was dealing with was not aware of the flood of calls about Shire.
However, I strongly recommend that you call Schwab and ask for the Cost Basis Group. You just have to mention Shire reporting.
I followed up with Schwab and next week they are issuing a corrected 1099-B. I expect the corrected 1099-B to be identical to the one I used for my tax return.
I reviewed my historical cost tracking and discovered that I had accounted for the Baxalta / Shire merger as non-taxable exchange, rather than correctly as a taxable exchange. Correcting that, my numbers also match the original Schwab 1099. Somehow I wonder if Schwab incorrectly assumed non-taxable Baxalta exchange as well?
So I agree, you are correct.
I have not heard back from Schwab yet on the issue but I expect the account team to call back eventually.
I just received a corrected 1099-B from Schwab. It undoes the previous Shire correction. It is now correct. The 1099-B is dated June 5, 2020. It can be found on-line.
I have only received the corrected 1099-B dated June 5. I just checked online and there were no new 1099's. The 1099 dated June 5 is correct. It matched my manual calculation using the merger details published by Takeda.
I have another one dated June 26, haven't really looked at the details... But all the "corrections" flagged are Shire again..
You can amend e-filed returns if they've been accepted; paper-filed returns may be amended once they've been mailed.
Select your tax year for amending instructions:
Keep in mind: You have 3 years from the date you filed your return or 2 years after you paid the tax due (whichever is later) to file an amendment.
Related Information:
The June 26 1099 added an additional item to the 1099 "Long Term Gain with Basis missing" for a small amount that matches nothing actually paid with a sale date of 1/22/19. The other entries match the June 5 1099 and are correct. Lucky you if you didn't receive it!
Back to calling Schwab on this one again. I will certainly hold off filing amended.