Cost Basis Organon Spin-Off

For TL;DR reasons, I own three (3) shares of Merck common stock. Last June, Merck spun off Organon and I received $9.99 in lieu of owning 0.3 shares of Organon stock.

The guidance on calculating cost basis for this massive windfall is as follows: “For U.S. federal income tax purposes, your aggregate basis in the common stock that you hold in Merck and the new Organon common stock received in the distribution (including any fractional share interest in Organon common stock for which cash is received) will equal the aggregate basis in the shares of Merck common stock held by you immediately before the distribution, allocated between your shares of Merck common stock and the Organon common stock(including any fractional share interest in Organon common stock for which cash is received) you receive in the distribution in proportion to the relative fair market value of each on the distribution date.”

Does this mean I take the cost of my Merck stock and allocate 91% of it to my 3 shares and 9% of it to the $10 cash, or…?

Hi, ChundoHadASnack.

For this question, I’m going to refer you to the Tax Strategies discussion board:

Who suggests you ask for AJ and tell her Fuskie sent you…

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