How do you calculate capital gain after a merger involving no cash?

To calculate capital gain after a merger involving no cash, determine the fair market value (FMV) of the shares received in the merger on the date of the transaction. Subtract your original cost basis (the price you paid for the shares before the merger) from this FMV. The difference represents your capital gain or loss. If the shares are exchanged for new shares of the merged entity, your cost basis in the new shares typically carries over from the original shares.