Cash in lieu of stock basis?

You mean March 06, right? Why not go to their web site?

lead you to the document Please keep in mind, even with the details you provided above, the exact tax consequences are always spelled out by a document issued by the company. Pardon if I am mistaken, but you say you bought FRO in Aug 06, their site says they spun out SFL in March 06. So either your dates are typos, or they have had multiple spinoffs off this other stock?

Joe

No its 03/2007 and their web site has nothing about 2007tax treatment. Phil

I think the 3/2007 spinout from the ADR is the "Q4" 3 SFL shares for each 28 FRO shares of "Q4 2006" from chart on

I would allocate basis from FRO to the new SFL shares based on the 6 March 2007 ex-dividend date FRO vs SFL prices. The allocating in proportion to the opening prices or average of highs and lows would each be acceptable.

One more thing: the footnote to that table says "Cost allocation in US is set basis the share price on distribution date". Despite that, in my non-expert opinion, the prices on the ex-dividend date would probably be the better ones to use. I would welcome other opinions.

By my calculations, item (4) is irrelevant.

// true number of shares after the split FRONumShares = 100 SFLNumShares = 100*3/28 = 10.71428...

// cost basis in FRO and SFL right after split FRO = FRONumShares*34.83 = 3483 SFL = SFLNumShares*27.25 = 292 net = FRO + SFL = 3475

// spinRatio is SFL's part of the net market cap spinRatio = SFL / net = 0.0773422...

// calculate cost basis of the true number of SFL shares original = 4348.95 OriginalSFL = Original * spinRatio = 336

// calculate cost basis of the fractional SFL shares SFLFraction = SFLNumShares - roundDown(SFLNumShares) = 0.71428... OriginalSFLForCashInLieu = OriginalSFL * SFLFraction/SFLNumShares = 22

// calculate cost basis for the stocks remaining in your holdings // this will be useful when you later sell or gift the shares // the purchase date for all shares will be 08/11/2006 OriginalSFLForHoldings = OriginalSFL - OriginalSFLForCashInLieu = 314 OriginalFROForHoldings = Original - OriginalSFL = 4013

Make sense?

I think so. My cost basis for the fractional shares $22, which means I have a small short term loss. If this correct I think just show my basis as $19.34, so as not to attract any attention from the IRS. Phil

You mean you'll make the gain zero so as not to attract attention? This makes no sense. It's very unlikely that the IRS computers will flag this anyway, and your honest computation was a cost basis of $22, so go for it. But there was some discussion on this thread about whether to use the split date or ex-dividend date (is that the date they announced it).

The ex-dividend date is the first date FRO traded without the right to get the distribution. Had you bought or sold the day before that date, the sale would have included (and therefore priced in) the right to the distribution.