How do you compute the gain/loss of Maytag stock because of the merger with Whirlpool?

Answer 1

The following is from the Whirlpool website. Check the link below for additional information:

Maytag shareholders received the equivalent of $21 per share of value for each share owned. The distribution to Maytag shareholders consisted of $10.50 in cash and .1196 shares of Whirlpool common stock for each share of Maytag stock held. Each full share of Whirlpool common stock in accordance with the terms of the agreement was valued at $87.78 (example for one Maytag share; $10.50 cash plus the product of $87.78 * .1196 = total value received of $21per share)

Whirlpool believes that the acquisition of Maytag Corporation was a fully taxable transaction for U.S. federal income tax purposes. As a result, Whirlpool believes a Maytag stockholder will generally recognize gain or loss as a result of the merger in an amount equal to the difference between the amount of cash plus the fair market value of Whirlpool stock received by the stockholder and the stockholder's adjusted tax basis in Maytag stock. However, the foregoing Whirlpool beliefs are for general information only and are not offered as tax advice to former Maytag stockholders. Each former Maytag stockholder should review the tax discussion in the registration statement regarding this transaction (See: Registration Statement on Form S-4, 333-128686, filed September 26, 2005 with the Securities and Exchange Commission) and consult his or her tax advisor for advice with respect to this transaction.

Answer 2

Did you get cash for your stock, or Whirlpool stock?

If you got cash, the gain or loss is the difference between your basis and the cash you got, and is reportable for the year when the transaction took place.

If you received stock in the acquiring company, no reporting is needed until you sell the new stock. Then its basis is the basis of your original stock.

Answer 3

What you sold it for minus what you paid. Merger's don't have an effect on the gain/loss unless you are forced to sell.