Dear Nathan:
>And even if they did give cash,
wouldn't it be classified as a dividend which would automatically
get reinvested into MCDT (or EMC) by your brokerage anyway?
No. The cash is received for the equivalent of a sale of the fractional share and gets reported on Schedule D. It is "cash in lieu," cash instead of, the fractional share. Using round, fictitional figures, if your cost basis in EMC is $50./share and you get cash for .7 share of MCDT, or $63. (assuming 1 share received is valued at $90)., you have a gain of $13. and pay tax on that $13.00.
The dividend portion of your question which I quoted above has me confused. Neither EMC nor MCDT pay dividends.
Re the Imation shares you received, that would take me too long to completely address. Let me just say: If you held the certificates for MMM and were in dividend reinvestment, your statements should give the amount of shares in the plan and those shares held by you. At split time, your plan shares would split (whole and fractional). The certificate shares you held would split, too, **but** you would get a check for the fractional amount. This fractional amount would not just get kicked into your reinvestment plan pool.
I could be wrong, but I *think* one's entire holdings of a company are treated as "plan" shares when held in a brokerage account--but this has no importance for EMC shareholders receiving MCDT because neither pay dividends.
Regards,
Lynn |
