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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I was a seat holder on the NY Board of trade which was privately

Resolved Question:

I was a seat holder on the NY Board of trade which was privately owned. In January of 2007 the NY Board of Trade was purchased by Intercontinental Exchange, a publicly traded company. I received shares of Intercontinental Exchange in lieu of my seat which represented ownership in the NY Board of Trade.

My question is, I sold some Intercontinental Exchange stock in March 2008 and I don't know how to value the stock as to my cost basis and purchase date. Do I use the value of the stock on the day I received it or a different value?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Basis is generally the amount of your investment in a property for tax purposes.

The basis of property you buy is usually its cost - the amount you pay for it in cash, debt obligations, and other property or services.

 

If you receive property as a result of an involuntary conversion, you can figure the basis of the replacement property you receive using the basis of the converted property.

Assuming that you did not report a capital gain/loss on conversion as not taxable transaction - generally - the replacement property's basis is the old property's basis on the date of the conversion.

see for reference - the IRS publication 551 page 7 - http://www.irs.gov/pub/irs-pdf/p551.pdf

 

Let me know if you need any help.

 

Customer: replied 7 years ago.
So you are saying my cost basis on the stock I sold would be what I originally paid for my seat, not the value of the stock on the day I received it?
Expert:  Lev replied 7 years ago.

Yes - that is correct.

 

In case that were two separate transactions:

-- the disposition of the seat on the NY Board of trade - the capital gain would be = (the fair market value of shares of Intercontinental Exchange) - (the basis - what you originally paid for the seat)

-- then - the fair market value of shares of Intercontinental Exchange on that day would establish the basis of that property.

 

For involuntary conversion - the disposition of the seat on the NY Board of trade is not reported as taxable transaction and the basis of shares of Intercontinental Exchange would be - what you originally paid for the seat.

 

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