Prudential Demutualization

[Sparky]

I have been reading threads going back to 2008 on this issue including the Fisher case etc. Most threads are from 2008; have a 2010 stock sale that was aquired by demutualization and would like to take that basis of 29.67. Any one have any more current results on how the IRS is receiving this? Thanks.

[Dusty2004]

No update

The appeals are dragging along. The IRS has not changed their stance that it is fully taxable. No other cases pending that I am aware of.

Dusty

[Gretel]

I am just dealing with the same situation, also wondering where this stands. I am thinking since IRS hasn't repealed since 2008 it is pretty safe to rely on the Fisher case as long as the client knows that the IRS still can repeal and is OK with this.

Sparky, as fas as cost basis goes, how did you come up with yours? I went to the Prudential website and looked up the effective date of the demutualization, which is 12/13/01 with cost basis of $29.30.

[Dusty2004]

Good luck

I am just dealing with the same situation, also wondering where this stands. I am thinking since IRS hasn't repealed since 2008 it is pretty safe to rely on the Fisher case as long as the client knows that the IRS still can repeal and is OK with this.

Sparky, as fas as cost basis goes, how did you come up with yours? I went to the Prudential website and looked up the effective date of the demutualization, which is 12/13/01 with cost basis of $29.30.

Gretel:

If you are not in the same district as the Fischer case good luck with that. The IRS has not bent on there applying the rules. Could be both preparer penalties and client penalties. Better to file with 0 basis and then file amended return with protective claim (I think that is what it is called).

Dusty

[jimmcg]

I have been reading threads going back to 2008 on this issue including the Fisher case etc. Most threads are from 2008; have a 2010 stock sale that was aquired by demutualization and would like to take that basis of 29.67. Any one have any more current results on how the IRS is receiving this? Thanks.

Filing a protective refund claim until the legal dust settles would be acting in your client's best interest.

[JON]

I think

you have substanial authority. IRS has not appealed. Now my statute is running on them. The IRS needs to do something, but for sure it will be slow. I have not heard of the IRS challenging anything. Protective claims that were filed and then amended I have heard different stories that some have received refunds and some have not.

[taxmom34]

are you also using re-invested dividends for the basis?

[Gretel]

Update

I have done more research on the issue and came across this link. This means the IRS is still fighting this. What I don't know is if a decision from the AZ district court would trump the US Court of Appeals for the Federal Circuit. Can anyone enlighten me?

http://www.calt.iastate.edu/briefs/CALTLegal%20Brief-IRS%20Argument%20in%20Insurance%20Demutualization%20Case.pdf

[Sparky]

Appeal

When is the deadline for the IRS to appeal this? If they don't, than we can amend with cost basis? (29.30 is correct; I was going on approximate)

[JON]

I think the BASIS

issue was not correct by the court, but you use what the stock opened at when it started trading.