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How do I record the capitalsource and Pacwest merger in quicken 2013?

Unknown
Unknown Member
edited January 2019 in Investing (Windows)

In the merger with CapitalSource, each share of CapitalSource common stock was converted into the right to receive $2.47 in cash and 0.2837 of a share of PacWest Bancorp common stock. PacWest is issuing an aggregate of approximately 56.7 million shares of PacWest common stock to CapitalSource stockholders. Based on the closing price of PacWest's common stock on April 7, 2014 of $45.83 per share, the aggregate consideration payable to CapitalSource common stockholders and holders of equity awards to acquire CapitalSource common stock is approximately $3.1 billion.

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018

    The relevant form 8937 for this transaction is at the bottom of the 'Stock Information" page on this site: http://www.pacwestbancorp.com/


    That document identifies a value per share for PACW after the merger of $45.83. The value of the 0.2837 shares a CSE shareholder received is then $13.00 / share of CSE. Adding on the cash received ($2.47 / CSE share) means that the CSE shareholder received $15.47 per share of CSE held.


    As I evaluate these types of transactions I see three cases depending on what you paid for the CSE shares. If applicable, each lot of CSE (shares you bought at different times for different prices) should be handled separately.


    Case 1: Your shares were 'expensive'; Basis > Total Value Received = 15.47197 per share originally held.
    • You have no current cap gains liability with respect to this lot.
    • Sell all shares of this lot at basis value adding cash to account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account (purchase price is old basis less cash received).
    • Your total basis for this lot will be less than your prior basis for this lot; you have no cap gains now, but will have greater cap gains in the future.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 2: Your shares were bought cheaply; Basis < Value of Shares Received = 13.00 per share originally held.
    • Your cap gain is limited by the amount of cash you received.
    • Sell all shares of this lot for (basis + cash received) adding cash to your account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis in new shares for this lot will equal your prior basis for this lot.
    • The entire cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 3: Your shares were bought in-between those two price points.
    • Your have a current cap gain liability, but it is less than cash received.
    • Sell all shares of this lot for value received ($15.47 / share) adding cash to your account.
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis for this lot will be greater than your prior basis for this lot.
    • Only part of the cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    At the end of processing all lots of the original holding, if you are left with a fractional share, sell that fractional share for the amount of cash-in-lieu that you received. That cash will be above and beyond the cash you received as part of the merger transaction.
    HTH. If you have further questions, please post back to this discussion.
  • Unknown
    Unknown Member
    edited December 2016
    q.lurker said:


    The relevant form 8937 for this transaction is at the bottom of the 'Stock Information" page on this site: http://www.pacwestbancorp.com/


    That document identifies a value per share for PACW after the merger of $45.83. The value of the 0.2837 shares a CSE shareholder received is then $13.00 / share of CSE. Adding on the cash received ($2.47 / CSE share) means that the CSE shareholder received $15.47 per share of CSE held.


    As I evaluate these types of transactions I see three cases depending on what you paid for the CSE shares. If applicable, each lot of CSE (shares you bought at different times for different prices) should be handled separately.


    Case 1: Your shares were 'expensive'; Basis > Total Value Received = 15.47197 per share originally held.

    • You have no current cap gains liability with respect to this lot.
    • Sell all shares of this lot at basis value adding cash to account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account (purchase price is old basis less cash received).
    • Your total basis for this lot will be less than your prior basis for this lot; you have no cap gains now, but will have greater cap gains in the future.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 2: Your shares were bought cheaply; Basis < Value of Shares Received = 13.00 per share originally held.
    • Your cap gain is limited by the amount of cash you received.
    • Sell all shares of this lot for (basis + cash received) adding cash to your account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis in new shares for this lot will equal your prior basis for this lot.
    • The entire cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 3: Your shares were bought in-between those two price points.
    • Your have a current cap gain liability, but it is less than cash received.
    • Sell all shares of this lot for value received ($15.47 / share) adding cash to your account.
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis for this lot will be greater than your prior basis for this lot.
    • Only part of the cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    At the end of processing all lots of the original holding, if you are left with a fractional share, sell that fractional share for the amount of cash-in-lieu that you received. That cash will be above and beyond the cash you received as part of the merger transaction.
    HTH. If you have further questions, please post back to this discussion.
    I received material, not sure whether from Capitol or PacWest that this merger had no tax consequence and was constructed as such.  Now, at 2015 tax time, I find out this is not so.  I got in touch with PacWest and received e-mail specific for the tax consequences of this merger. from an officer of PacWest  On April 2, 2015, I went to the PacWest web site to obtain information necessary to my accountant and downloaded same but when I went back on April 3 to check material again, I find that that page is no longer available.  I am sure, that a corporate notification stated: no tax consequences due to the way the merger was constructed.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    The relevant form 8937 for this transaction is at the bottom of the 'Stock Information" page on this site: http://www.pacwestbancorp.com/


    That document identifies a value per share for PACW after the merger of $45.83. The value of the 0.2837 shares a CSE shareholder received is then $13.00 / share of CSE. Adding on the cash received ($2.47 / CSE share) means that the CSE shareholder received $15.47 per share of CSE held.


    As I evaluate these types of transactions I see three cases depending on what you paid for the CSE shares. If applicable, each lot of CSE (shares you bought at different times for different prices) should be handled separately.


    Case 1: Your shares were 'expensive'; Basis > Total Value Received = 15.47197 per share originally held.

    • You have no current cap gains liability with respect to this lot.
    • Sell all shares of this lot at basis value adding cash to account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account (purchase price is old basis less cash received).
    • Your total basis for this lot will be less than your prior basis for this lot; you have no cap gains now, but will have greater cap gains in the future.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 2: Your shares were bought cheaply; Basis < Value of Shares Received = 13.00 per share originally held.
    • Your cap gain is limited by the amount of cash you received.
    • Sell all shares of this lot for (basis + cash received) adding cash to your account
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis in new shares for this lot will equal your prior basis for this lot.
    • The entire cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    Case 3: Your shares were bought in-between those two price points.
    • Your have a current cap gain liability, but it is less than cash received.
    • Sell all shares of this lot for value received ($15.47 / share) adding cash to your account.
    • Buy proper number of new shares for a lesser amount leaving cash received ($2.47 / share) in the account.
    • Your total basis for this lot will be greater than your prior basis for this lot.
    • Only part of the cash received is capital gains.
    • Remove shares just bought, Add same number of shares for same cost but with original lot date as acquisition date.
    At the end of processing all lots of the original holding, if you are left with a fractional share, sell that fractional share for the amount of cash-in-lieu that you received. That cash will be above and beyond the cash you received as part of the merger transaction.
    HTH. If you have further questions, please post back to this discussion.
    The Form 8937 is still available on the site, though one time I clicked for it just now, the site did respond "not available".  I can only suggest you try again.  

    Information in that form includes the following statement:
    "The merger of CSE with and into PACW qualifies as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. As a result, each CSE shareholder will recognize a taxable gain, but not a loss, equal to the lesser of: ..."

    That is a rather two-faced statement - "a tax-free reorganization" and "taxable gain" for each shareholder -  but it is pretty common language in these deals as well.  Depending on your specific basis price point, you may or may not have incurred a capital gain liability through this transaction as outlined above.
This discussion has been closed.