To: voodooist who wrote (812 ) 4/12/1998 12:55:00 PM From: pappy Read Replies (3) | Respond to
Well, first of all, "Did you sell your shares?". If no, then you don't have to do anything-you're only require to account for the stock gain or loss at time of sale. Summit indicated that this distribution was to be treated as a tax-free return of capital (DO NOT confuse this distribution with a taxable dividend or a Capital Gain Distribution). Those are different creatures. Rather, since this was basically a return of capital, your basis (what you paid minus any brokerage commissions) in your Summit shares will decrease by $1.25. This is the value (basis $1.25) to be place on each share of LCAV you own at the point in time that you sell. However, as you can see, the basis in your Summit stock also decrease by $1.25 per share (basically it's a wash). It's like having a full glass of water (BEAM shares) and then getting another glass and pouring some of the water from the BEAM glass into the new glass (there's been no change in the amount of water). Now, say you're still holding LCAV and BEAM. Lets say in 1998 you sell lcav at $3.00 a share. For tax purposes, the calculation would be: $3.00 - 1.25 - commission costs = approx. $1.75 per share profit that must be reported on the Schedule D. Now, with your BEAM shares, let's say you purchased them at $7.00 per share in 1996. In 1998 you sell them for $20.00 a share - what a joke. Your basis would be like this: $7.00 - $1.25 - commission costs = approx. $5.75. Your gain would be $20.00 - $5.75 or approx. $14.25 per share (but who cares, you're making money)...I hope this helped and if you have any questions about this, feel free to ask...Pappy
