merger

[TAX4US]

Wilmington trust merger with MTB 05-16-2011. Basis in WT was $4500.00. On 5-16-2011 we got .051372 shrs of MTB (6) for our shares in WT(125). It would appear that this is a taxable loss here.

In the prospectus summary it states: The merger is intended to be taxable to Wilmington Trust Stockholders as to the shares of M&T common stock they receive.

It would appear that this does not qualify for the like kind exchange rules based on the statement.

Am I on the right track or do I wind up with an extremely high basis per share in new stock?

Any thought on this one?

Thanks

[FEDUKE404]

Likely not a taxable event

Wilmington trust merger with MTB 05-16-2011. Basis in WT was $4500.00. On 5-16-2011 we got .051372 shrs of MTB (6) for our shares in WT(125). It would appear that this is a taxable loss here.

In the prospectus summary it states: The merger is intended to be taxable to Wilmington Trust Stockholders as to the shares of M&T common stock they receive.

It would appear that this does not qualify for the like kind exchange rules based on the statement.

Am I on the right track or do I wind up with an extremely high basis per share in new stock?

Any thought on this one?

Thanks

If all that occurred is you had X shares of Company A and then received Y shares of Company B, there is generally no tax event until such time as you actually dispose of the shares of Company B. Your cost basis for old Company A shares and new Company B shares remains the same.

If you received stock + cash, you may have a currently taxable event.

And, the most usual case, if you received cash in lieu of a fractional share in the new company, the gain/loss for sale of that "piece" is definitely a taxable event. Based upon the facts presented, if you received 6.0 shares (and not 6.4215 shares per ratio), you likely "sold" the fractional share. Your cost basis for that sale would be 0.4215/6.4215 times your original cost basis for the 125 shares. The remaining cost basis (full shares) would therefore be 6.0/6.4215 times your original cost basis for the 125 shares.

The prospectus should explain things better, and should there be something other than "normal" (simple) tax consequences the corporation IR department frequently provides useful worksheets.

Is this your company?: "Under the terms of the merger agreement, Wilmington Trust common shareholders will receive 0.051372 shares of M&T common stock in exchange for each share of Wilmington Trust common stock they own in a stock-for-stock transaction ....."

Here is the initial prospectus: http://www.wilmingtontrust.com/repos...R_11_01_10.pdf


FE

[TAX4US]

This is what didn't make since. If it were a stock for stock and tp received only $38 for the fraction that make new bank stock basis @ a number never to be obtained. $700.00+ per share in new stock. Just lamenting.