FairPoint Communications Inc (stock symbol FRP) common stock was received on April 1, 2008, in a tax-free spinoff from Verizon (symbol VZ). One share of FairPoint was distributed for every 53.0245 shares of Verizon. This equates to a spinoff ratio of .018859 per share of Verizon.
To determine the cost basis of FairPoint using the opening price relative market value method, use the following percentages to allocate your cost basis in Verizon to the new stock:
FairPoint Communications Inc (FRP) 00.463 % of cost basis of Verizon Verizon Communications (VZ) 99.537 % of cost basis of Verizon Total 100.000 %
IMPORTANT: Your cost basis for Verizon must first be adjusted for all prior corporate reorganization actions, such as the MCI merger, AT&T divestiture, Idearc spinoff, etc. For a complete listing of past corporate actions and appropriate cost allocation factors, consult this website:
FairPoint Communications of Charlotte, NC filed for Chapter 11 bankruptcy on October 26, 2009 and emerged from bankruptcy on January 13, 2011. Ownership of the company was given to the creditors, and the former common shares were cancelled with no value. You can claim a capital loss for your entire FairPoint cost basis in 2009 or later.
Use our handy spinoff calculator to compute your new cost basis and the gain or loss on any "cash in lieu" of fractional shares payment. Just click on the image of the spinner to the right and then select "Fairpoint Communications" from the drop-down menu. Many fields will be pre-filled for you. Simply add your own cost basis information for Verizon.