Short term or long term?


E

Ernie Klein

On 2/6/07 Lucent (LU) merged with Alcatel to become Alcatel-Lucent
(ALU). I received new ALU stock in exchange for my LU stock that came
from the Lucent spinoff (10/14/06). I sold the ALU stock on 12/11/07.

The "acquired" date for the ALU stock and the sold date make it seem
like it is short term, but since I didn't actually purchase any new
stock, it seems to me that a company merger shouldn't change my long
term stock into short term.

If I am correct that this is really long term, then how do I show that
on Sched D when the dates indicate short term? Do I use the acquired
date of the Lucent stock even though the stock that I sold didn't even
exist until 2/6/07 ?


BTW I have the same problem with Agere (AGR) merging with LSI Logic Corp
(LSI) on 4/2/07. Other long time holders of AT&T stock who sold off the
small oddball spinoffs in 2007 may have the same issues.
 
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P

Paul Thomas, CPA

Ernie Klein said:
On 2/6/07 Lucent (LU) merged with Alcatel to become Alcatel-Lucent
(ALU). I received new ALU stock in exchange for my LU stock that came
from the Lucent spinoff (10/14/06). I sold the ALU stock on 12/11/07.

The "acquired" date for the ALU stock and the sold date make it seem
like it is short term, but since I didn't actually purchase any new
stock, it seems to me that a company merger shouldn't change my long
term stock into short term.


It doesn't change the holding period. Mergers - as this is most likely -
have the original purchase date carry forward. The same rules apply for
spin-offs.




If I am correct that this is really long term, then how do I show that
on Sched D when the dates indicate short term?

The IRS does not get your purchase date information, so enter the date you
bought the original shares.




Do I use the acquired date of the Lucent stock
Yup.




even though the stock that I sold didn't even
exist until 2/6/07 ?

The stock you sold is an extension of the stock you bought back in.....2006.






BTW I have the same problem with Agere (AGR) merging with LSI Logic Corp
(LSI) on 4/2/07. Other long time holders of AT&T stock who sold off the
small oddball spinoffs in 2007 may have the same issues.




The same type of rules apply,
 
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E

Ernie Klein

Paul Thomas said:
It doesn't change the holding period. Mergers - as this is most likely -
have the original purchase date carry forward. The same rules apply for
spin-offs.
That's what I thought, Paul. Thanks for confirming it.
 

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