What are the tax consequences for former Phelps Dodge stockholders?
The receipt of the merger consideration for holders of Phelps Dodge common shares pursuant to the transaction will be a taxable transaction for U.S. federal income tax purposes. In general, you will recognize capital gain or loss as a result of the transaction equal to the difference, if any, between (1) the sum of the fair market value of the Freeport-McMoRan common stock as of the effective time of the merger and the cash received in the transaction and (2) your adjusted tax basis in the Phelps Dodge common shares exchanged in the merger. In aggregate Phelps Dodge shareholders realized $129.27 of value per share based on the fair market value of FCXÕs common stock on the effective date of the transaction, March 19, 2007. This dollar amount does not include the any cash payments made in-lieu of fractional shares.
