In October 1988, I received shares of Medusa Corporation, which was distributed by Crane in the form of a tax-free dividend. How do I allocate my original tax basis between my Crane Co. Common Stock and these Medusa shares?

Q:

In October 1988, I received shares of Medusa Corporation, which was distributed by Crane in the form of a tax-free dividend. How do I allocate my original tax basis between my Crane Co. Common Stock and these Medusa shares?

A:

The tax basis in the shares of Crane Co. Common Stock held by stockholders prior to the Distribution should be allocated 78.023529% to Crane Common Stock and 21.976471% to Medusa Common Shares including any fractional interest.