I received $13K in checks and $17K instock from a company that was sold - I did capital gains for stock, how is the checks treated?

[TomYoung]

TurboTaxRichardG, J.D., LL.M might have provided the correct answer, but that would be pure luck because there IS NO "generally correct" answer to a cash plus stock merger.  It depends entirely on how the deal was structured.  In order to answer the question the names of the companies involved need to be disclosed.

[carriejake]

The companies involved were Shire PLC acquiring Baxalta.  Please let me know what you think.  Thanks for your help!

[RichardG · Accepted solution]

I assume this was a merger or buyout of the company you owned.  Assuming the value of the cash and stock received exceeds the value of the stock you surrendered in the transaction, the cash is treated as capital gain.

[TomYoung]

I have addressed the Baxalta / Shire transaction here:

https://ttlc.intuit.com/questions/3814587-can-you-help-baxalta-shire-merger-cash-and-stock

The transaction is fully taxable and you use the sum of cash plus FMV of the stock as "proceeds" to determine your reportable gain or loss.  It's "as if" all the proceeds were paid to you in cash and then you used some of the cash to buy Shire stock.  Your basis in the Shire stock is the same as the stock's per share FMV used in the "proceeds" calculation and your holding period begins at that time. 

Tom Young

[carriejake]

My wife had this stock purchased over 25 years ago in an employee stock plan.  Is there any way I can get a cost basis for the cash received?

[TomYoung]

I don't understand.  In your original post you said "I did capital gains for stock" so I assumed you knew the basis of the stock sold.  Is that not the case?  What did you mean by that statement?  

If you don't know the basis for stock purchased over 25 years ago through and employee stock plan - an ESPP? - it would be extremely difficult to come up with a reasonable basis at this point.  You can make some sort of estimate I suppose but it has to be one that the IRS will accept, if they ever ask.  Perhaps the 25-year ago numbers are small enough that $0 for the basis isn't too far off?