Calculating tax basis

[Bella]

My grandfather died in 1964. His estate included 100 shares of BNI stock valued at $1.25 a share. That stock was put into a residuary trust which was to continue as long as my grandmother was alive. She died in 1988. At that point, the trust had 318 shares of BNI, due to stock dividends, and the stock was valued at $19 a share. The trust ceased to operate and the shares were distributed to me. A few months later, BNI was acquired by Minnesota Power. I ended up with 254 shares of Minnesota Power. In 1995, Minnesota Power acquired ADESA. There was a 2 for 1 stock split in 1999 so I had 508 shares. in 2004, Minnesota Power (now Allete) spun off ADESA, which was valued at 60%. I got 508 shares of ADESA. Last year, I sold my shares of ADESA when it was acquired by KAR.

My question: what is my basis for the ADESA stock?

[gkaiseril]

Date of Trust Distribution

Your value for purposes of gain for this asset is the value on the date of distribution from the trust, 618 shares * $19.00 per share or $6,042.00 for all the shares . This value woud be allocated to the total of succeding entitites for these securties. In the case of spinoffs the percentage of of the source security is used to allocate the basis.

For losses you may need to provide more information and seek the help of a professional taxpreparer

[Bella]

Thanks, but I'm not sure what you mean by "In the case of spinoffs the percentage of of the source security is used to allocate the basis." Is the 'source security' ADESA (the spin off) or Allete (the original stock)?