Client holds shares in a foreign corporation, via ADR (American Depositary Receipt) "shares."
During 2006, the company issued to existing shareholders subscription rights for the purchase of new shares.
Pursuant to ?? rules, US holders of the ADRs could NOT exercise the rights. There were also some restrictions for residents of other foreign countries, excluding the "home" country itself (la belle France).
The rights were sold as a group by the holding company on the open market, with each US holder of the ADR receiving the proportionate income, and the proceeds were reported via Form 1099-B as a capital gain activity.
Does anyone have a good idea re the cost basis of the rights that were sold? (I do know the cost basis of the underlying stock, but the foreign company is not helpful so far in responding.) My best guess is a ZERO cost basis, with the holding period the same (LTCG) as the underlying stock.
If anyone has dealt with a similar issue in the past.......am I close??
Thanks.
FE
During 2006, the company issued to existing shareholders subscription rights for the purchase of new shares.
Pursuant to ?? rules, US holders of the ADRs could NOT exercise the rights. There were also some restrictions for residents of other foreign countries, excluding the "home" country itself (la belle France).
The rights were sold as a group by the holding company on the open market, with each US holder of the ADR receiving the proportionate income, and the proceeds were reported via Form 1099-B as a capital gain activity.
Does anyone have a good idea re the cost basis of the rights that were sold? (I do know the cost basis of the underlying stock, but the foreign company is not helpful so far in responding.) My best guess is a ZERO cost basis, with the holding period the same (LTCG) as the underlying stock.
If anyone has dealt with a similar issue in the past.......am I close??
Thanks.
FE