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Technology Stocks : Broadwing Inc.
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From: Crony1/8/2007 10:19:54 PM
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So, how do I calculate the taxes?

I just looked into my Ameritrade account under "Unrealized gains" and they replaced all BWNG shares with LVLT shares and the cost basis remains the same.
Let's say I had 10000 shares bought at $5.00. The deal was that each BWNG shares is exchanged for 1.34 shares of LVLT and $8.18 in cash. So now instead of 10000 shares of BWNG with a cost basis of $50000 I have 13400 shares of LVLT with the same cost basis. Which means that they treated the cash portion as capital gains with the cost basis of zero or like a cash dividend.
Or like I sold all BWNG shares on 1/4. If you have Ameritrade or Scottrade account look under "Realized Sell Activity" for the last 7 days. You will see your BWNG shares sold at $13.xx (must be the current price then minus 1.34 LVLT shares).
Which means that I will have to pay taxes on a gain of $81800.

I remember there were numerous discussions as to how treat this cash payment and my understanding was that I will have to pay taxes on a gain of $31800 ( cash payment 81800 minus 50000 cost basis) and will ride the LVLT shares with a cost basis of zero.

Some questions:
1. Is it possible Ameritrade calculated the cost basis without considerations about the tax implications?

2. Below is the link to the agreement. Can anyone take a quick look if there are any indications about the way the capital gains should be calculated.

yahoo.brand.edgar-online.com.

3. Can I still pay taxes on the $31800 even though Ameritrade treats the cash part as dividends.

Any accountants here?
Thanks.
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