Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
EMC and corporate action
Posted by: hotdog, January 17, 2017 04:43PM
In 2016 my stock in EMC corporation was bought by DELL corporation. Accordingly, I have received a cash deposit in my brokerage account and shares of stock from DELL Technologies listed as DVMT on the stock exchange for this acquisition. To date my brokerage has defined the action as
"corporate action".
At present I have not received information from either EMC, DELL or my brokerage regarding how I should comply with this action for my 2016 tax obligation. I assume that the cash payment can be handled using a cost basis analysis and the DVMT can remain in my portfolio without any IRS requirement until I sell the stock.
Your advice would be appreciated,

Re: EMC and corporate action
Posted by: Alan S., January 17, 2017 07:13PM
Before cost basis reporting, these acquisitions just resulted in your dollar cost basis for EMC being applied to the DVMT as a new cost basis per share. The cash was normally reported as fully taxable so your basis did not change.

But under basis reporting you will probably have to wait for the 1099B for the cash proceeds to see how much basis was applied to it, then reduce your cost basis for the DVMT by that amount.

Re: EMC and corporate action
Posted by: assassin, March 6, 2017 04:34AM
i'm seconding this question. the only things i can follow on my 1099-B are the proceeds portion of the merger transactions (which seem to just be cash, and suspiciously ignore the share part of the merger consideration), and the cash-in-lieu of fractional share. i can't remotely duplicate any of the cost bases listed.

because this merger involves a newfangled tracking share, does it even follow the rules explained here:

at least when the brokerage software botches the DMND/LNCE merger, it has $0 basis for one transaction, and the proceeds lowered by the same discrepancy, so the Gain column is correct. but with EMC/DELL/DVMT, it's pure gibberish.

if the rules are similar to what's in the above links, is the merger consideration value based on the inception price of DVMT, or some fraction of VMW prior to merger close?


EDIT: some good links:


[] (has Form 8937 , which explains that part of each EMC share is considered "exchanged", and part is "redeemed")

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