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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Colin Cody who wrote (2042)3/22/1999 11:15:00 AM
From: OFW  Read Replies (1) of 5810
 
Hope you can help me on this one, Colin.

Assume that I held 80,000 shares of Stock A with a basis at 25 cents. The company is bought out and stock is converted into 10,000 shares (1:8 conversion ratio) of the buyout company, which at the time of the buyout is a private non-traded company. At the time of the buyout/conversion, I have held all of the stock for less than six months.

About nine months later the buyout company goes public as Stock B in an agressively promoted IPO opening at $90. I now have 10,000 shares in the IPO and sell them at a rather healthy profit.

Now for the question. At the time of IPO, one half of my shares are now well over a year old. Do these shares qualify as a long term hold as the original shares are now nearly 15 months old? Or are all shares converted to a new acquisition date because of the buyout/conversion?

Offie
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