Stock sale

Forum|Forum|3 years ago
February 5, 2023
1 reply
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A company I am invested in was acquired by another company. Compensation was in cash and stock. When calculating my gain on sale, is the stock portion included in my gain or is it carried forward using the original basis. Example: I own 10 shares at $10 cost ($100). I sold and received $190 cash and 2 shares of the new company ($20 Book Value). Is my gain $90 plus the gain in value for the new shares ($10 increase in BV)? If so, my new shares would have a new basis of $20?

ThomasM125

You received $210 from the exchange ($190 plus $20 worth of stock). Since your basis in the investement was $100, your gain would seem to be $110. The new shares would have a basis of $20, since that is what you included in your gain. Also, the value of the stock you acquired should be set at the market value, not the book value.

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Chipper2022Author

I was unclear if I was to include the value of the new stock in the gain or defer that until I sell it to. And as this is still a non-public company, BV and Market Value are the same.

what complicates this is my BV originally was $4/sh. I received $12 a share in cash and stock. My net gain was $8/share but not all in cash. If I had taken all in stock, I could have deferred the cap gain until selling for cash in the future.

I think the $8 is my cap gain and my new basis is the current BV/MV on the stock (which is $19/share). Too much math here.