Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Colin Cody who wrote (2135)	4/14/1999 2:21:00 AM
From: Luminous	Read Replies (1) of 5810

Help! My dad received 29 shares of stock from a company that he worked for in 1977. He received dividends over the years in a DRIP plan accumulating 31 more shares over the years through the reinvested dividends. He paid taxes on the reinvested dividends each year. In 1995, the company split into three companies, and his 60 shares were converted to 60 shares in each of the three new companies. In 1998, one of the three companies was bought out and he received 92 shares of stock in the new company, and a cash amount equal to the fractional part of a share. He received a 1099B for a sale in the amount equivalent to the 60 shares of the old company stock, and a note stating that a gain/loss would be incurred based on the tax basis of the 60 shares. How do you arrive at the tax basis for each of the three company stocks? One of the three stocks continues to grow through a DRIP plan. I was unaware of his situation until tonight, and told him he should file for an extension and see a tax advisor, but any insight would be greatly appreciated. I have no idea why the share conversion would take place as a 1099B stock sale.

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