Stock question- ALU and Nokia

[F150HD]

Don't buy/trade stocks much (esp now that I am at Vanguard), but years back ended up w/ multiple shares of Alcatel Lucent - ALU.

Their value has dropped by half or more.

Now they are being bought out by Nokia who is offering roughly .5 shares of Nokia for every 1 share of ALU.

My question is: what happens to my capital loss on this conversion? as if I sold the ALU now I could write off the loss (correct?) but my ALU shares becoming Nokia shares.....what happens to that loss? how does this work?

I have no issue holing the Nokia stock when its converted , I don't plan on selling it anytime soon, if ever.

If someone could point me in a direction I'd appreciate it.

Thank you in advance.

http://www.forbes.com/sites/greatspecul ... explained/

[Tamahome]

Bump. You may want to re-title to say "How do I handle pre-boglehead holdings: ALU and Nokia stock" Many on this site will see the title and think that you are looking for an opportunity to buy an individual stock and move along without reading it. (There has been a lot of that lately for some reason). The question is a good one, so I would also be interested to know the answer.

[kaneohe]

.......................................

Now they are being bought out by Nokia who is offering roughly .5 shares of Nokia for every 1 share of ALU.

My question is: what happens to my capital loss on this conversion? as if I sold the ALU now I could write off the loss (correct?) but my ALU shares becoming Nokia shares.....what happens to that loss? how does this work?

......................................
http://www.forbes.com/sites/greatspecul ... explained/

Typically, your basis will remain the same.....e.g. if you bought 100 sh of ALU @ $10/sh, your basis is $1000. If those 100 sh of ALU get converted into 50 sh
of Nokia,your basis is still $1000 in those 50sh. Your loss is not fixed but depends then on the Nokia price.

[siamond]

I know this isn't your question, but... The Alcatel-Lucent merger was one of the biggest blunders ever... And now Nokia? When will those execs understand? Merging companies with very different cultures and partly overlapping portfolios is just a recipe for disaster.

Take your loss, sell your stock, buy more index funds, and never look behind. At least, you will save on some taxes to come.