Assume that Tesla offered to pay $15 in cash and 0.0433 shares of Tesla stock per
SolarCity share instead of
the consideration offered in the deal as structured.
1. Consider again a person with 10,000 shares of SolarCity stock.
a. Suppose the person had a $10 per share basis in her SolarCity stock. How
much taxable gain or loss will the person recognize at the time of the merger?
b. What basis per share will the person take in the Tesla stock received?
c. Will the tax basis this shareholder takes in the Tesla stock received be larger,
smaller, or equal to its market value? By how much?