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April 27, 2022
Question

Stock basis after a company acquisition

  • April 27, 2022
  • 1 reply
  • 0 views

I know that I generally need to keep lots of stock acquired at different times separate for purposes of computing their basis.  My question is whether it is ok to recombine two lots under the following circumstance:  I owned 100 shares of Company A acquired in 1998 for $33/share, and 50 shares of Co. A acquired in 1999 for $24/share.  In 2001, company B acquired A, and holders of Co. A shares received 1.5 shares of B for each share of A.  I then owned a total of 225 shares of B.  150 of those shares have a basis of $33/1.5=$22/share.  75 of those shares have a basis of $24/1.5=$16/share.  Given that all of my Co. B shares were acquired in the same transaction, can I simplify things and consider the basis of all 225 shares to be (150x22 + 75x16)/225 = $20/share? 

 

Many thanks.

1 reply

April 27, 2022

in a tax-free merger/acquisition tax basis carried over so you have two lots each with its own tax basis. 

clivedawAuthor
April 27, 2022

Thanks for your reply.  I know I have two separate lots.  But my question was, am I *allowed* to combine them under these circumstances?