Merger with Cash and Stock Received

Forum|Forum|6 years ago
March 6, 2020
2 replies
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Bristol Myers Squibb acquired Celgene in November 2019. I'm not sure how to reflect the information on the 1099 and 1009 B by brokerage provided. I owned 320 Celgene shares on the date of the merger, 11/22/19 and the same number afterward. For each share of Celgene I received one share of Bristol Myers Squibb and $50 in cash for each share.

The market value of the Celgene stock was $34,569 according to my October statement (320 shares @ rate x 108.03). In November after the sale I had the same amount of shares, 320 @ $53.40 for a market value of 18,220.80). I received $16,000 in cash.

How would this be characterized for tax purposes? My brokerage showed on the 1099B:

320 shares sold/disposed on 11/21/19

Proceeds reported 34,787.20

date acquired: various

Cost basis: $4,117.85 (before the merger)

Gain or loss: 30,669.35

There is a notation on the 1099: “MERGER”

The amount of stock (shares) I ended up with after the merger is the same but the market value declined. The cost basis after the merger was $17,888. I did receive cash in the amount of $16K.

I received a higher percentage of stock than $ from the merger.

Is this a taxable event? If so, how do I enter it in Turbotax?

MinhT1

You have to account for the merger as the sale of your Celgene stock on the date of the merger. The proceeds of the sale is equal to the cash you received and the value of the BMS stock on the date of the merger.

The cost basis of your BMS stock is the value on the merger date.

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Kalyani74

I have a similar situation. I had 55 CELG stock that got transitioned into 55 BMY stock as of 11/21/2019. I received a statement with the following:

Box 1a - 55

Box 1b - date acquired

Box 1c - 11/21/2019

Proceeds 1d - $5979.05

Cost or other Basis 1e - $7709.95

I am unsure how to report this. Also for each CELG stock everyone got $50 cash as well that is equal to in my case, 55 * 50 = $2750.

Please help. Live chat gave me this link and no real help

Thanks

Kalyani

sjt67Author

Normally, I do use Turbotax to prepare my taxes. Bacause of this stock issue, I went to a nationally known tax preparation company and this company advised me that the gain should be reported as a capital gain on schedule D. This tax preparation company could not explain to me why the proceeds, cash and stock, would be reported as a capital gain. That would mean I would owe federal and state taxes. I don't know if what they told me is correct. IRS Pub 550 on investments doesn't address in detail how to report the proceeds of a merger where stock and cash are involved. Based on the estimates of what I would likely owe for federal and state taxes, I decided to file for extensions on my returns. This was based on the advice of a CPA I consulted. I bumped up the amounts for what I would owe for federal and state taxes and submitted vouchers/forms with them. My taxes will be paid by April 15 and my state's deadline. I am going to have a CPA review my brokerage statements and do my tax return. If I owe, I owe. At least at this point, I have some breathing room to get my returns filed.

I hope what I've written here saves you some grief. In my situation, I think it's best to have a CPA go over this stuff in person.

TXnov7

I have 200 shares of HFF which merged with JLL. HFF stocks were acquired in several stages. at the time of the merger, I received 30 shares of JLL and cash of $4926.

How do I report cash and stocks received on merger?

fanfare

Employee

BMY says:

"a Celgene stockholder that is a U.S. holder(1) will recognize taxable capital gain or loss in an amount equal to the difference, if any, between (i) the sum of (A) the amount of cash, including cash in lieu of fractional shares, received by such U.S. holder in the merger, (B) the fair market value of the shares of Bristol Myers Squibb common stock received by such U.S. holder in the merger, and (C) the fair market value of the CVRs received by such U.S. holder in the merger, each determined on the date of the completion of the merger and (ii) such U.S. holder’s adjusted tax basis in the shares of Celgene common stock exchanged therefor."

In other words, what you got minus your cost basis.

Report as Long or Short Term, depending on your holding period.