Help needed with taxes due to VMware merger with Broadcom

[dina_sm]

I had some VMW ESPP shares from 2015, which got converted to AVGO shares plus cash when WMware merged with Broadcom in 2023 (form 8937 link below)

https://investors.broadcom.com/static-files/7720c4c1-c940-4d9d-800c-66819bfdc7a0

This year I got 1099-B from ETrade that includes the cash amount I received from the merger as a capital gain with cost basis $0. Based on the form 8937 instructions, this looks correct, since the cash received is less than my capital gain from the entire consideration (AVGO at FMV + cash).

However, the cost basis of my AVGO shares at ETrade now shows as $0. This isn't right, but ETrade says it most likely won't be providing the cost basis for these AVGO shares. What cost basis should I report when I sell these AVGO shares? Is it the cost basis of VMW I had before the merger?   

For example:

Original VMW shares purchased in 2015 - 100 x $100 (cost basis $10000)

After merger in 2023 received - $4800 and 13 shares of AVGO (plus some cash in lieu of fraction)

1099-B reports $4800 long term capital gain with $0 cost basis

My questions:

1. Is the 1099 correct and I just need to report it as is on 2023 tax return?

2. What is the cost basis of my AVGO shares now? Is it $10000, which was the cost basis of my VMW ESPP?

3. 15% ESPP discount has to be reported as ordinary income. I assume this needs to be done when I sell AVGO shares, is this correct?

Thanks!

[inin2012]

Ah I have the same questions and come looking for answers!

Based on my findings (there is a page in github created by some former or current vmware employees), the cash portion needs to be reported fully as taxable income (capital gain) according to form 8937 (it's lesser than Cash+FMV AVGO - VMW cost basis. The VMW cost basis becomes the AVGO share cost basis (VMW total cost/AVGO quantity you received). And the 15% ESPP discount will be reported as ordinary income in the future when you sell AVGO shares.

I honestly don't understand the cash portion being fully taxable. Didn't I pay to buy the VMW ESPP? Same as my RSU, I already paid tax on them when they were vested.

[KathleenSeidel]

I am in the same boat. My husband received Broadcom stock in exchange for VMWare, and I am absolutely baffled as to how to report it using TurboTax. Broadcom has posted a Form 8937 (https://investors.broadcom.com/static-files/7720c4c1-c940-4d9d-800c-66819bfdc7a0) with info about the stock exchanges to VMWare employees. However, according to a post made five years ago (https://ttlc.intuit.com/community/taxes/discussion/turbotax-does-not-support-irs-form-8937-irs-form-...), "TurboTax does not support form 8937." Is this still the case? If so, is there a way to append that form to a return filed with TurboTax? How does one indicate that the "stock sale" was in fact a stock-for-stock exchange? I am using TurboTax Deluxe. Will I need to upgrade to TurboTax Premier to deal with this?

[DianeW777]

Form 8937 is filed by the organization who is making changes to the stock. This document will provide you changes to your stock basis which you will use on your tax return to determine your gain or loss.

If you are unsure how to proceed with the information you have, you could choose to use TurboTax Live Full Service.

@KathleenSeidel