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March 5, 2021
Question

Contingent Value Right

  • March 5, 2021
  • 1 reply
  • 0 views

When Tahoe Resource, in which I was a shareholder, was acquired by Pan American Silver, effective 02/22/2019, I received shares of Pan American Silvers. I also received some CVRs which were tradable and  I sold.  My brokerage 1099 shows the sales price and sales date but I have to establish the cost basis.  Is my cost basis $0 or is it the estimated fair market value at the effective time that was established by Pan American?

    1 reply

    JohnB5677
    March 7, 2021

    No, the cost basis of the CRV is not zero.

     

    If nothing else had happened the cost basis of Pan American Silver would be the original purchase price of Tahoe Resource.

     

    The CRV that you received would deplete the basis based on the value of the CRV on the date it was received.

     

    The sale of CRV is taxable depending on the holding period and its value on the date of the sale.

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