Update: New IRS Reporting Rules for Stock Splits, Mergers and Acquisitions



The IRS recently came out with a Notice (Notice 2011-18) stating that, for transactions occurring in 2011, penalties will not be imposed against issuers for missing the deadline to file a return or post the tax return on the issuer's primary public Web site (which generally was required 45 days after the transaction), provided that the return is filed or the posting is made by January 17, 2012.

However, this extension does not apply to the issuer's requirement to furnish information to the issuer's stockholders and nominees of its stockholders (which is generally due January 15 of the year following the year in which the transaction occurs).

Beginning this year, according to forms or regulations the IRS prescribes, any issuer of a “specified security” will have to file an information return setting forth:

1. a description of any organizational action (occurring after December 31, 2010) that affects the basis of the specified security of the issuer;

2. the quantitative effect on the specified security's basis resulting from the organizational action; and

3. any other information IRS may prescribe.

Stock splits, mergers and acquisitions are examples of organizational changes that affect basis.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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