I have a 1099-B I cannot figure out and the broker is clueless. Coca-Cola Enterprises merged on 10/4/10 with Coca-Cola, in a complicated deal in which $10 per share was paid to CCE stockholders, and now their stock is under the newly traded company, Coca-Cola Enterprises NEW. The 1099B shows the $10 per share payment (no problem with that) but it also has reported the 100 shares of CCE (NEW) at the FMV of $2,208.00 as gross proceeds. The TP has NOT sold the stock and still only has 100 shares in his account, so it is not a 1-1 split. To even further muddy the waters, the 1099-B states "A loss may not be taken on any cash and stock received from this merger." What is up with that? I have been all over the internet, both their websites, invester relations, etc and there is no explanation of the tax treatment of these issues. I cannot understand why the FMV of the new shares was reported as a sale. And if I were to use the TP's (entire) basis against this "sale" it would be a loss. I have even discussed this with another broker who has been in the business for 30 years, and he can't figure it out either. He owns Coca-Cola but not Coca-Cola Enterprises. I have seen lots of mergers and acquisitions, but not anything like this. Anybody have any insight here?
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Contact the company
There should have been a prospectus and/or online worksheet available to take you through the maze.
I've seen these in the past. Generally speaking, you end up with a taxable cap gain for the "cash" proceeds and a new (starting?) basis for the replacement shares.
I would suggest contacting investor relations of the involved company(ies) and they should be able to point you in the correct direction.
FE
This web site (PDF) should help - start reading around page 6
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