Re: Tax treatment of stock buyout
Well, I don't claim to be a "tax wizard", but I have been through several of these as an investor, so I will share with you what I can.
First of all, you should get a merger offering which will explain the terms of the deal, the financial aspects of the companies involved, and information on the expected tax treatment for the deal.
I don't know the specifics of the PD-FCX deal, but typically they work as follows:
If the deal is structured as a "reorganization", you will have a capital gain (per share) equal to the lesser of (1) the cash received or (2) the total value of the stock plus cash minus your basis. So, using your numbers, your capital gain would be 126 - 76 = 50 (which is less than 88). Keep your fingers crossed that the deal closes at least one year after your PD acquisition date so your gain will be long-term.
Your new basis, again for your numbers, would be the price of FCX at the closing.
Hope this helps - but again, more specific info will be in the offering memoranda.
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