How to report shares of stock converted to cash due to a merger on your tax return?

I owned shares of stock in Schering-Plough. They merged with Merck and as a result, some of my shares got converted to shares of Merck and some got converted to cash. Do I report that cash as a capital gain?|||It is a long-term capital gain if you held the shares for at least one year, otherwise it is a short-term gain. That is, assuming the sales price (per share) was more than your basis price.|||Yes!





Yes.... you report the cash as long-term gain.





But.... the real question is... how much is the gain???





Technically, there's 2 methods:


1. Tax the entire cash amount (usually a relatively small amount so it's "immaterial" to pay the tax on that entire small amount).





2. You should have received information from the company on how to convert the old shares to the new shares and to allocate the old cost to the new shares.


- Technically, there Is a small amount of cost allocated to the cash shares, IF you want to spend the time to figure out the allocation method, to save you some (Small and immaterial amount) of taxable gain!|||reduce your basis(cost) by the cash received.