Re: Tax treatment of PFE-AGN merger for US shareholders
From a tax standpoint, PFE shareholders are effectively selling their shares in the existing PFE on the day the merger closes and buying an equal number of shares of the new PFE (i.e. Pfizer, plc, domiciled in Ireland). This is true even though nothing physically changes in your brokerage account other than the CUSIP (and formal name) of the security.
The PFE sale price for calculating your capital gain will (AFAIK) be the average of the high and low prices on the day the deal closes (expected in 2H16). Your PFE cost basis for calculating your capital gain will be the same as it is now.
If your PFE cost basis is higher than your PFE sale price as calculated above, the capital loss on your PFE shares is useless—i.e. it cannot be used to offset ordinary income or capital gains from other securities.
(If you elect to take a portion of your consideration for your old PFE shares in cash, everything works the same as above except that you end up with fewer shares of the new PFE.)
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For AGN shareholders, the deal is a non-taxable swap of each AGN share for 11.3 shares of new PFE.
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