How do I treat the gain from a Cash and Stock Acquisition?

BAT acquired the remaining portion of RAI in a Cash and Stock deal. As a result I received cash and shares in BAT. I was thinking I could treat it like other deals where the gain recognized by lot is the lesser of cash received or gain realized. Does this transaction qualify for that treatment and how do you reflect in TT?

5117

Level 13

Jun 5, 2019 4:54:46 PM

This is a fully taxable transaction where the "proceeds" of the sale is the combination of the cash plus the fair market value of the stock received. It's "as if" you received all your proceeds in cash and then took some of that cash and bought some BAT stock.

Tom Young

NOTE TO FUTURE READERS OF THIS ANSWER:

You must understand that the answer given is relevant to this particular transaction. There simply is no one or two sentence answer that covers all cash + stock mergers/acquisitions.

New Member

Jun 5, 2019 4:54:48 PM

Thanks Tom. So just straight up “proceeds” less basis. No application of the lesser of cash or gain?

Level 13

Jun 5, 2019 4:54:49 PM

No.

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How do I treat the gain from a Cash and Stock Acquisition?