spinoff cost basis on stock
is it true that stock shares you receive from the a spinoff has neither loss nor gain or is the cost basis zero because you received shares without paying for them?
Thank you,
Douglas
is it true that stock shares you receive from the a spinoff has neither loss nor gain or is the cost basis zero because you received shares without paying for them?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Wed, 2013-06-19 04:40
Taxation of the shares is provided by the company at the time of the spinoff. In most cases, the basis you have in the original company is pro rated according to a ratio provided by the company with a portion of your basis applying to the shares of each company. There is no tax due or reporting until either of the shares are sold. Again, check with the company that is issuing the spinoff for tax provisions for the particular spinoff.