Capital Gain or Loss Calculation for Mergers & Acquisitions (Canada)
I have a question about calculating capital gains/losses for mergers and acquisitions in which fractional shares and cash are provided as part of the transaction. What part should be listed as capital gain/loss given my adjusted cost basis (ACB) and what I received as part of the M&A? This is for US-based stocks.
In this case, CompanyA was acquired by CompanyB.
Say I had 50 shares of CompanyA at per share. Ignoring the commission, the ACB is
USD * 50 = ,500 USD
On the acquisition, I received 10 shares of CompanyB at USD and USD per CompanyA share. The value of this transaction is
USD * 10 + USD * 50 = 0 USD
Would I report a capital loss of ,500 USD - 0 USD = 0 USD?
Or would I report the cash part of the merger ( USD * 50 = 0 USD) as a capital gain, then deal with capital gain/loss later when I sell the CompanyB shares? For example,
Capital gain now: 0 USD
Capital gain/loss later: ,500 USD - CompanyB settlement price on sale * 15 shares = ???
Any insight you can provide is greatly appreciated.
Thanks in advance!
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