I have a question about calculating capital gains/losses for mergers and acquisitions in which fractional shares and cash are provided as part of the transaction. What part should be listed as capital gain/loss given my adjusted cost basis (ACB) and what I received as part of the M&A? This is for US-based stocks.

In this case, CompanyA was acquired by CompanyB. Say I had 50 shares of CompanyA at $30 per share. Ignoring the commission, the ACB is

$30 USD * 50 = $1,500 USD

On the acquisition, I received 10 shares of CompanyB at $25 USD and $10 USD per CompanyA share. The value of this transaction is

$25 USD * 10 + $10 USD * 50 = $750 USD

Would I report a capital loss of $1,500 USD - $750 USD = $750 USD? Or would I report the cash part of the merger ($10 USD * 50 = $500 USD) as a capital gain, then deal with capital gain/loss later when I sell the CompanyB shares? For example,

Capital gain now:          $500 USD
Capital gain/loss later: $1,500 USD - CompanyB settlement price on sale * 15 shares = ???

Any insight you can provide is greatly appreciated. Thanks in advance!


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