Prudential's Demutualization
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Level 1

Prudential's Demutualization

My father received shares of Pru stock as a direct result of Prudential's demutualization.  And the cost basis of those shares is zero. He gifted those shares over to me. When I decide to sell those shares.  What will my cost basis be?

6 Replies
Level 15

Prudential's Demutualization

Your cost is the same as his cost.  Now if you wait and inherit the shares you get a step up in value at the date of death.  But with a gift your cost is the same as the giver.

Level 1

Prudential's Demutualization

This is a reply I got back in 2008 from Computershare, Prudential's transfer agent when ask what my cost basis would be.

       " On December 18, 2001 when the account was created, the closing price was $29.95 per share. However, your cost basis depends on how you acquired your shares of Prudential Financial common stock. If you received shares as a direct result of Prudential's demutualization, it is our understanding the cost basis of those shares is zero".

   This is how my father received these share. As a result of Prudential's demutalization.  He did not buy them from a brokerage  firm.  I filled out a transfer of ownership form on 4/18/2006. When finalized I became the owner of the stock on 04/25/2006.

   So my  father had no cost because he did not buy them from a brokerage firm. So if his cost basis is zero then my cost basis would also be zero?????

     

Level 1

Prudential's Demutualization

PRU STOCK.PNG

Level 15

Prudential's Demutualization

as @VolvoGirl stated, your basis is the same as your father's, so, yes, your cost basis is zero.....

Level 1

Prudential's Demutualization

so when I decide to sell those shares how do I report this on my tax form? Will I receive a form from my brokerage firm? And will the sale be reported to the IRS?

 

Level 15

Prudential's Demutualization

Yes, yes and yes.  You should get a 1099B for sales.  Since your cost basis is zero it will all be taxable but at long term capital gains rate.  

 

If you are using the Online version you need to us Premier to enter investments sales.  Or any Desktop program.  All the Desktop programs have the same forms. You just get more help and guidance in the higher versions. 

 

Enter a 1099B  under

Federal Taxes Tab or Personal (Home & Business)

Wages & Income

Then scroll down to Investment Income,

Then Stocks, Mutual Funds, Bonds, Other - click Start or Update

 

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