Shareholder purchases bonds of Company A on 1/1/2009. Company A declares Chapter 11 on 2/1/2009 and emerges from Chapter 11 on 11/1/2009.
On emergence from Chapter 11, all of the original common shares are cancelled, and bondholders are given common shares of the reorganized company on 12/1/2009.
Should the new common shares issued on 12/1/2009 be given a cost basis of the cost of the bonds, with a purchase date of 1/1/2009? Could those newly issued shares be sold for long term capital gains on 1/1/2010?