Biotech Values

[Rocky3]

Hard for me to see this as constructive receipt. You are being forced to give up your shares, and so delaying this transaction for as long as you can has a reasonable possible purpose aside from the tax issue. Constructive receipt is more like you have the check in hand but simply delay depositing it - there remains no doubt at all that the underlying transaction has been consummated.

I have always thought that it depended on the type of tender/merger. Two kinds - "one-step" and "two-step."

One-step is getting the shareholders to approve the merger and then having them tender their shares at a later date. Generally takes a loner time.

Two-step is to have the shares tendered to the acquirer. After the acquirer has enough shares (usually 75-90%, depending on state of incorporation), acquirer forces statutory merger.

I think that if the one-step merger is used, the transaction date is the tender date of the tender. It is the constructive receipt issue. The shareholders of the acquiree have the absolute right to the money since the company has legally been merged into the acquirer.

I have always thought that the transaction date of the two-step merger is that date of cash being received since there was not a legally enforceable right until that date. It might be the date of the statutory merger after the tender, but I don't see how it could be the date of the tender. The accountant who call me to try to get me to tender my VPHM shares on December 26, said that I could not defer my gain to 2014 by not tendering. I choose to not believe him (or at least hope that others might not tender on time and that they would delay the tender to 2014).

This also has application to the prior discussion about timing of charitable donation of appreciated stock. A gift of stock after the vote in a one-step merger doesn't avoid recognition of the gain.