Tax Treatment of Sunoco Merger with Energy Transfer Partners?
I am puzzled with my brokerage treatment of this merger in that they show an overall capital gain? The stock prices of the two companies at merger were about the same so I couldn't under stand the gain. I thought it might have something to do which my determination of the cost basis of the original shares SUN shareges purchased. Should the the value of the SXC shares (at $13/share) received in the spinoff before the merger be used to decrease my original cost basis in the SUN shares? Also should the cost basis of the SXC shares received then be taken as essentially zero? These cost bases come up in computing the gain/loss for the cash they distributed $25 per share, and also in the "cash in lieu" distributed for fractional shares. When I called the brokerage to try to understand their numbers on the 1099, all they said is their accountants used the information off the ETP website. I haven't looked there yet. Just thought I would post to see anyone on this board had some guidance. Thanks!
Dear ARB: Thanks for your guidance on adjusting our cost basis on SUN shares after the SXC spinoff. It worked perfectly! Our numbers now agree with those on the brokerage 1099. However I had to go to the ETP website and print off their document on how to determine our new cost basis after the ETP merger when the SUN shares converted to a cash distribution and fewer shares of ETP(as one option). Their example was helpful. Could not generate the same numbers as on the 1099 but will enter those into Turbo Tax as best estimate. Joseph
It was just a lucky guess. Not having ever owned SUN made it hard. Your K-1 from ETP will show a capital account and a $$ amount contributed. That number should be pretty close (they average all the purchases in a given month) to the basis numbers from your broker. As to TTax - just get it close. Nobody can probably get it down to exactly the last $$.
Joseph - I think you are a former SUN shareholder who received a combination of ETP units and cash. Correct? That calculation should be fairly simple as you had a basis in your SUN shares and received ETP and cash. I know SUN had some transactions with SXC spunoff and the value of those shares would reduce your basis in your SUN. If you got a 1 to 1 distribution then your SUN shares basis would be reduced by $13 per share. That is also the cost basis of the SXC shares that you evidently still own. Am not familiar with the SXC spinoff and would guess that the regular posters here are not as well. Need to go back and see what happened then as that is your question. Hope this assists.
Initial post merger tax basis of ETP = adjusted basis of SUN immediately prior to merger PLUS gain recognized in merger transaction MINUS cash received. This must be done on a lot by lot basis as each lot of SUN stands by itself.