|1.|| Is the cash and / or Lennar stock that I received as a result of the Lennar / US Home merger taxable?
| ||The receipt of Lennar stock is tax deferred, however, the cash you received will be
taxable to the extent you recognized gain on the transaction (as described in
Question 2 below).|
|2.||What is the amount of gain that I will recognize as a result of the merger?
| ||The gain that you recognize is the lesser of (1) the amount of cash received in the
exchange and (2) the amount of gain that you realized in the exchange. The amount
of gain that you realize in the exchanges is the excess of (a) the sum of the cash
received plus, the fair market value of Lennar Corporation common stock received in
the exchange over (b) the tax basis of the U.S. Home common stock surrendered.
A loss on the exchange is not deductible.|
|3.||What is the tax basis of the Lennar Stock that I received as a result of the merger?
| ||The aggregate tax basis of the Lennar stock that you receive will equal the
aggregate tax basis of the U. S. Home stock you surrendered, plus the amount of
gain you recognized and reduced by the amount of cash you received.|
|4.||What was the market value of the Lennar shares on the exchange date?|
| ||The value of Lennar shares on the exchange date was $18.53125 based on the
average of the high and the low trading price.|
|5.||What is the amount of gain on the fractional shares that were cashed out?
What market price will be used to determine the value the cash payment for
any fractional share I receive?
| ||The merger agreement provided that no fractional shares of Lennar would be issued.
Instead, any fractional shares were converted into cash equal to the Market Value
of a share of Lennar Common stock times the fraction. You are deemed to have
received your fractional share of Lennar and to have sold it for cash. The value of
Lennar common stock used for the cash in lieu of the fractional share was $19.90.
You will recognize gain or loss with respect to the fractional share equal to the
difference between the amount you received for it and your tax basis. Your basis is
the fractional share will be determined as described in Question 3 above.
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