Thanks, Ira.

I have performed the calculation per the spreadsheet you
referenced. Just a couple more questions. Can you please
school me on what constitutes a long term capital gain,
short term capital gain and return of capital?

Also when stock is sold, is it on a LIFO basis or a FIFO
basis? We had bought 100 shares in 3 different purchases
and sold 25 before the merger. I have made the calculations
for all three purchases, but I'm not sure which set of
numbers to use.

Thanks,
Devon

IraS1@aol.com wrote:
> In a message dated 1/28/2006 1:45:02 P.M. Eastern Standard Time,
> mackinac@bivio.com writes:
> Providian and Washington Mutual entered into a Cash/Stock
> merger on
> 10/5/05.  Here were the transactions our club had
> on our broker
> statement:
>
> 1. "Sell" Providian, 75 shares @ $2 = $150 cash into
> our
> account, no commission was charged.
>
> 2. "Received" Washington
> Mutual, 30 shares.  No cash was
> received or disbursed for this
> transaction, however
> "$2/share" is noted in the transaction
> description.
>
> 3. "Reorg-cash/stock merger" = $20 cash out of our
> account
> to our broker (a fee)
>
> 4. "Dividend" Providian = $1.52,
> recognized on my statement
> at 10/13/05, not acknowledged on my 1099 at
> all.
>
> I guess I've never been through a merger before, so I
> don't
> understand how to record it.  Can someone please
> help?
>
>
> This is a fairly complicated transaction. You need to determine how much of
> the $150 you received was long term capital gain, short term capital gain, or
> return of capital. You can do this using the worksheet at http://media.corporate-ir.net/media_files/irol/10/101159/SampleTaxWorksheet.pdf
>  
> Once you know this make the following entries:
> Enter the return of capital (if any) against Providian on 10/5.
> Enter the long-term capital gain (if any) as a LTCG dividend against
> Providian on 10/5.
> Enter the short-term capital gain (if any) as a STCG dividend against
> Providian on 10/5.
> Enter the merger of Providian into Washington Mutual yielding 30.0375
> shares of Washington Mutual.
> Enter -$20 (negative number) as an income>type:return of capital against
> Washington Mutual on 10/6.
> Enter a sale of 0.0375 shares of Washington Mutual on 10/13 for $1.52.
> (Contrary to what your statement shows, this is not a dividend.)
>  
> If you have any questions, please come back and ask.
>  
> Ira Smilovitz