Former Santa Fe Energy Shareholders
TAX BASIS IN SANTA FE SNYDER SHARES
Santa Fe Energy merged with and into Snyder Oil Corporation on May 5, 1999. The name was then changed to Santa Fe Snyder common. There was no change in tax basis for the Santa Fe Energy Resource holders.
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.