You are here:

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

Advertisement


Question
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?

Answer
Bill,

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  

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Stancil, CPA

Expertise

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 www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

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.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

©2016 About.com. All rights reserved.