What is the tax liability for cash received from TWX-CHTR merger?

[canonpet]

How do I report the tax liablility

[TomYoung · Accepted solution]

To say "it's unclear" certainly is an understatement.

In their Form 8937's - one for holders of TWC stock before the merger and the other for holders of CHTR stock before the merger (and I don't know which stock you originally owned) - available here

http://phx.corporate-ir.net/phoenix.zhtml?c=112298&p=irol-charter-twc-merger-materials

the companies attempt to provide guidance.  However, for holders of TWC prior to the merger that Form 8937 proposes two different possible treatments depending on if the cash received is deemed a partial redemption of TWC shares or if the entire first merger transaction is deemed a "recapitalization."

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NjM2NDg2fENoaWxkSUQ9MzQwODEyfFR5cGU9MQ==&...

The companies do say they intend to deem the cash received in the first merger as a partial redemption of TWC shares and give an example of how to account for the transaction in this manner.  You can follow their example with your own numbers substituted for theirs to develop your own income tax return figures to report.

Essentially part of the cash is considered "proceeds" from a sale of a portion of your original TWC shares.

Tom Young