Is this a taxable event?

[tintern55]

Praxair, Inc and Linde PLC merged in 2018.  Our Praxair stock was converted directly to Linde stock resulting in the same shares and same cost.  Received a 1009 B from Computershare showing the proceeds in 1d.  If one trades old shares for new through a merger, the IRS does not look on the event as a taxable transaction.  Is this correct?

[robtm · Accepted solution]

Yes, that is correct. There is no taxable event until you sell your shares. However, in a merger there is sometimes a cash in lieu where fractional shares of less than 1 share are not converted to the new company stock but you receive cash instead, usually this is a small amount and the cost basis would be what you paid for the same fraction of your old stock and could be a gain or loss.

[robtm]

Your above comments don't show up, however I received 2 emails from TT with 2 further questions in them. I;ll try to answer them.

You say you did not receive any cash, but there is an entry in 1d of your 1099-b. did this amount go into your brokerage account? If so, then you still received it and need to report it. see below on how to amend your return based on which TT program you are using.

How do I amend a 2018 return in TurboTax online?

Amend your 2018 return if you need to change or correct something after you already filed it.

Keep in mind: You have 3 years from the date you filed your 2018 return (or 2 years after you paid the tax due, whichever is later) to file an amended return.

     First, make sure you really need to amend and that your 2018 return was accepted in TurboTax Online or paper-filed through the mail. You can't amend a return that hasn't been filed yet.

    Sign in to TurboTax and make sure you've selected Tax Home on the left side of your screen.
        If you don't see this, select the menu icon in the upper-left corner to expand the menu.
    Under Your tax return & documents, select 2018 and then Amend (change) return.
        If you only see the option to amend 2017 or earlier, it's because you can't amend an unfiled 2018 return. Instead, just select Take me to my return, make your changes, and disregard the rest of these instructions.
    Select Amend using TurboTax Online.
    Carefully follow the instructions. Don't worry if your refund changes to $0. This is normal on amended returns.
    When finished, we'll give you instructions for printing and mailing your amended return as amendments can't be e-filed.

Three weeks after mailing your amended return, you can start tracking it at the IRS Where's My Amended Return? tracking tool. Please allow at least 16 weeks for the IRS to process your amended return.

Processing times for amended state returns vary from state to state. If it's been more than 12 weeks since you mailed your amended state return, and you haven't heard anything, we suggest you contact your state tax agency.


To amend your 2018 return in the TurboTax CD/Download software:

    Open the return you want to amend in your TurboTax software program.
    Make sure your return is exactly as it was when you originally filed it.
        If you made changes after you filed, undo them. We suggest comparing your on screen numbers with a paper copy of your filed return.
    Now, make an "amend" copy your return by selecting Save As (Mac: select Duplicate) from the File menu. This preserves the originally-filed return.
         Name the copy to distinguish it from the original, like 2018 Amended Smith B Form 1040 Return.
    You should now be working inside the copy you'll be amending. Inside your program, search for amend and then click the Jump to link.
    Select Continue on the We'll help you change (amend) your return screen.
    On the following screen, Did you already file your return? select Yes, I've already filed my return and then select I need to amend my 2018 return. Select Continue and then carefully follow the instructions to amend.
        Don't worry if your refund meter drops to 0; this is normal. Your calculations will come out correctly in the end.
    When finished, we'll provide instructions for mailing your amended return, as amendments cannot be e-filed.

[tintern55]

Thank you for taking the time to respond to my question.  (Not sure what happened with the comments.) Received a 1099B with 1d populated with the total $ amount of exchanged shares.  On 10/31/2018 the brokerage account exchanged XXX number of PX shares to the same number of LIN shares in the same day.  Brokerage acct # remained the same, $$ amount remained the same.  Identified transaction type:  Merger.  My 2018 taxes have already been filed.  Did not receive the 1099B until May 5th, 2019.  I understand how to amend my 2018 Turbo Tax taxes.  It is not clear how to input this 1099B or even if I have to.  There's does not appear to be a merger or exchange option for this 1:1 transaction in Turbo Tax for 1099Bs.  Especially since I did not receive the proceeds or physically transact it.    Truly appreciate your help on this rather confusing situation.

[robtm]

see the following link on the internet about tax consequences of the merger. <a rel="nofollow" target="_blank" href="https://investors.linde.com/en/merger-tax-information">https://investors.linde.com/en/merger-tax-inf...>

I don't know how TT would handle the 8937 form in the amended process. suggest you contact TT and maybe they could help: <a rel="nofollow" target="_blank" href="https://support.turbotax.intuit.com/contact/#/home">https://support.turbotax.intuit.com/contact/#/ho...>

[costbasis]

This was a taxable merger and the taxpayer must recognize gain but not loss according to Form 8937 and the tax opinion in the prospectus.  It is because a domestic US corporation was acquired by a foreign corporation for stock.  The fair market value of Linde PLC was $163.45 on the date of the merger.  See the stock merger calculator at costbasis dot com for a free calculator to help you.

[tintern55]

Does  it make a difference as this was a merger not an acquisition?

[costbasis]

No it does not make a difference.  It was an acquisition by stock merger.

[pk]

@tintern55 , @robtm ,      I am not sure I understand the comment about foreign vs. domestic share and recognition thereof.  As I read the material from the merger, all it implies is that  your X number of Praxair shares were sold  for  $163.45 and you bought X number of ( obviously involuntary conversion ) Linde shares for $163.45 each.  Thus you have to recognize the gain in the year it occurred i.e. 2018.  So the gain is based on your old basis  and the exchange price  ( 163.45 ) and your new basis is $163.45 per sh. going forward.   Thus you need to file an amended return to cover the gain ( assuming you have held the Parair shares for more than 1 year.

[costbasis]

This was a Section 357 merger.  If it had been a merger between two US-domiciled corporations it would probably have been tax-free with carryover basis.  Because it was a merger of a US-domiciled company into a foreign company, it is a taxable transaction where the taxpayer must recognize gain but not loss.  It is not the same result as a straight cash sale for $163.45 because in a straight cash sale you would recognize loss if there was one.  Just use the stock merger calculator and you will arrive at the correct result.

[pk]

Stop selling your services here --please .   The particular merger  document pretty clearly directs the shareholders what to do.  Also section 357  has nothing to do with  the taxpayer but everything to do with how the surviving corporation does its accounting ( IMHO).  To me  this is simply a case of surrendering your shares  and receiving in exchange a new share at market price.

[costbasis]

It is a completely free calculator to help people.