Former Santa Fe Snyder Shareholders
Information pertaining to Snyder Oil Corporation shareholders of record May 5, 1999 with respect to the transaction in which each outstanding share of Snyder common was exchanged for 2.05 shares of Santa Fe Snyder Corporation (SFS) common stock:
TAX BASIS CALCULATION
The tax basis of your Snyder stock surrendered is substituted for the tax basis in the SFS stock received in the transaction. Therefore, your basis in each SFS common share will be calculated by dividing your basis in each Snyder share by 2.05. For example, if your basis in each Snyder share was $10, then your basis in each SFS share would be $4.88.
FRACTIONAL SHARES
No fractional shares of SFS stock were issued. Therefore, holders of Snyder shares received cash in lieu of such shares. A holder who received cash with respect to the fractional share is treated as having received such fractional SFS share pursuant to the merger and then as having sold such fractional share for cash. In these cases, you will need to calculate your tax basis on the fractional shares for which proceeds are received in order to determine the amount of gain or loss with respect to the fractional shares.
Example: Shareholder owns 50 shares of Snyder with a tax cost basis of $10 per share. Upon conversion, the shareholder received 102 shares of SFS and proceeds from the sale of .5 of a share of SFS. Fractional share of SFS stock multiplied by tax basis per share of SFS = total tax basis (.5 share stock x $4.88 = $2.44).
Accordingly, the shareholder’s taxable gain or loss would be the amount by which the proceeds received for such fractional share exceed or are less than the $2.44 basis. You would have received a form 1099B for tax year 1999 that identified the fractional share amount.
TAX BASIS IN DEVON SHARES
The tax basis of your SFS stock surrendered is substituted for the tax basis in the Devon stock received in the transaction. You received .22 share of Devon for each share of SFS stock surrendered. Therefore, your basis in each Devon common share is calculated by dividing your basis in each SFS share by .22. For example, if your basis in each SFS share was $10, then your basis in each Devon share would be $45.45.
Fractional Shares
No fractional shares of Devon stock were issued. Therefore, holders of SFS shares received cash in lieu of such shares. A holder who received cash with respect to the fractional share is treated as having received such fractional Devon share pursuant to the merger and then as having sold such fractional share for cash. In these cases, you will need to calculate your tax basis on the fractional shares for which proceeds are received in order to determine the amount of gain or loss with respect to the fractional shares.
Example: Shareholder owns 60 shares of SFS with a tax cost basis of $10 per share. Upon conversion, the shareholder received 13 shares of Devon and proceeds from the sale of .2 share of Devon. Fractional share of Devon stock multiplied by tax basis per share of SFS = total tax basis (.2 share stock x $45.45 = $9.09).
Accordingly, the shareholder’s taxable gain or loss would be the amount by which the proceeds received for such fractional share exceed or are less than the $9.09 basis. You would have received a form 1099B for tax year 2000 that identified the fractional share amount.