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Tax Law (Questions About Taxes)/1099 B proceeds from a company merger


I owned Eaton stock and the company just completed a merger November 30th. Today I received a 1099 B for $11,600 for the sale of old Eaton stock, which is fully taxable. For every share of the old Eaton Iím entitled a share the new Eaton plus cash for the fractional shares.  The FMV of the old and newly issued stock is $51.90. I figured out my capital gains as $8300 (I do my own taxes). From what Iíve researched this is entered as a straight stock sale and Iím taxed on the gains as if I sold the stock myself. Am I correct in this thinking? Up until this point, I was getting back federal but owed the state and they basically were going to cancel each other out. Now, I will owe fed and state a substantial amount since I didnít anticipate this new income.  Do I have any recourse to lessen my tax hit? And, how would you advice a client in this situation as far as dealing with the tax authorities?


Thanks for your question.

Unfortunately, it is a taxable event, entered as a straight stock sale.  Not sure how you came up with $8,300, as I don't have full information.  You should take the basis in your old stock and subtract that from $11,600 to get your gain.  Of course, if you held the stock over 12 months, it would be a long-term gain taxed at favorable rates.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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