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How to enter acquisition of TEG by WEC where both stock and cash involved?

Unknown
Unknown Member
edited January 2019 in Investing (Windows)

Comments

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    The the respective amounts and # of shs is???
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • pwmmboothe
    pwmmboothe Member ✭✭
    edited July 2016
    500 shs TEG for 564 ($1.128/sh) plus $9290.00 ($18.58/sh)
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018

    Based upon only the info that you've provided, I'd record the $9290 as a Dividend, and then use the "Corporate Acquisition" transaction for the stock portion
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • pwmmboothe
    pwmmboothe Member ✭✭
    edited July 2016
    Thank you.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018

    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH
  • Jeffrey Kirk
    Jeffrey Kirk Member ✭✭
    edited October 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    I originally held 113.644 shares of Integrys, with a total basis of $8,031.22, or $71.67 per share.  As a result of the merger, I received (a) 128 shares of WEC, (b) $2,111.51 cash, and (c) $8.70 cash in lieu of fractional shares.  I am having trouble following your spreadsheet in recording this transaction.  The breakdown between short term and long term is as follows:  short term, 4.191 shares, basis of $302.02;  long term, 109.453 shares, basis of $7,729.20.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    LT and ST are really not relevant.  What really matters is what price you paid for the shares you bought each time you bought shares.  Your average price might be $72/sh for the ST shares and $70.62/sh for the LT shares but in both cases you may have bought some shares for under $69.52 and others for more than $69.52 / sh.  Rigorously speaking, you can't combine any; you have to treat each purchase -- each lot -- individually.  I'll leave the decision up to you as to how much you can combine multiple purchases into one or whether you want to do that.  

    For those shares you bought for less than $69.52 (but more than $50.94), you would sell the TEG shares for 69.52 and then buy 1.128 times as many WEC shares for 50.94.  That leaves $18.58 / TEG share sold as cash in your account.  

    For those TEG shares for which you paid more than 69.52, you would sell those shares for the price you paid (your basis).  You would then buy 1.128 times as many WEC shares for less money such that you are left with 18.58 / TEG share as cash.  Example 1:  if you paid $80 for one share of TEG, you would sell that one share for $80, then buy 1.128 shares of WEC for (80 - 18.58 = 61.42) or buy the WEC shares at 61.42 / 1.128 = $54.45 / WEC share.  Example 2:  If you paid $7,729.20 for 109.453 shares - all at the same time and same price ($70.6166 / share), you would sell those 109.453 shares for the $7,729.20 and then buy 109.453 * 1.128 = 123.463 shares of WEC for ($7,729.20 - 18.58 * 109.453 = $5,695.56).  That is buying the WEC shares for $46.132 / WEC share.  You sold for 7,729.20 and bought for 5,695.56 leaving a cash amount of 1,324.76 which is, of course, 18.58 * 109.453.  To repeat, I am not endorsing lumping all LT lots into one, but that is the sort of math you are doing.  

    When all that is done for all lots of TEG, then you sell the fractional shares (113.644 * 1.128 = 128.190 WEC shares, therefore 0.190 fractional shares) for the $8.70 cash-in-lieu amount you received.  

    HTH

    (4/9/16 -- edited this comment to correct what were AT&T references to WEC.  Have no idea why AT&T appeared in the original version.  Likely a carryover from some other similar reply.)
  • pwmmboothe
    pwmmboothe Member ✭✭
    edited July 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    for q.lurker and/or HTH:  I worked your original answer to me of 8/2/15. I set up an Xls spreadsheet and got my answer the way you instructed.  My original costs were low, low.  Thanks to you I confirmed that my max LT gain would be the amount of cash received.  This was confirmed today upon the arrival of my Morgan Stanley statement a/o 7/31.  The have it as you confirmed, the amount of cash received.  Thanks again for your help. pwmmboothe
  • pwmmboothe
    pwmmboothe Member ✭✭
    edited July 2016


    Based upon only the info that you've provided, I'd record the $9290 as a Dividend, and then use the "Corporate Acquisition" transaction for the stock portion

    Not correct!
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    You're welcome (HTH = Hope this helps).
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited December 2016


    Based upon only the info that you've provided, I'd record the $9290 as a Dividend, and then use the "Corporate Acquisition" transaction for the stock portion

    ENTIRELY correct, based upon the info provided ... which I qualified my answer with.  If the OP provided incomplete info, they get incomplete responses.
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Jeffrey Kirk
    Jeffrey Kirk Member ✭✭
    edited October 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    Thanks Lurker!
  • Jeffrey Kirk
    Jeffrey Kirk Member ✭✭
    edited October 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    Lurker,
    I would like to include a spreadsheet I built reflecting my exact situation.  How do I do it?
    Thanks.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    On this site, one can attach a file to either an answer or to an original post (one you initiate).  So you either need to provide an answer to this post, or start your own post.  I would recommend the answer even if it is not directly answering the question of the originator.  

    Note that MS-Office files may carry along personal information such as the file originator's name when posted to this or any other site.  Be prudent with privacy.
  • Jeffrey Kirk
    Jeffrey Kirk Member ✭✭
    edited October 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    Thanks, I will answer and provide.
  • Jeffrey Kirk
    Jeffrey Kirk Member ✭✭
    edited May 2018

    Lurker,


    As I mentioned, here is my analysis of my particular case.  The original 82 shares were inherited from my father-in-law and the original basis was the step-up basis on his date of death.  All other re-investments were made by me on the dates as noted.


    If you wouldn't mind, please take a look and give me your comments.


    Thanks.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    Lurker,


    As I mentioned, here is my analysis of my particular case.  The original 82 shares were inherited from my father-in-law and the original basis was the step-up basis on his date of death.  All other re-investments were made by me on the dates as noted.


    If you wouldn't mind, please take a look and give me your comments.


    Thanks.

    From a somewhat cursory look, it appears you have the right picture.  One thing I did looking at your Sheet 2 table was sort the table by basis/share (column D).  I then color-coded the three groups - below 50.94, 50.94 to 69.52, and above 69.52.  That let me see more clearly that you pulled in the right gain and no loss for each lot.  It appears you have the right understanding.

    It does seem to me Column M should be a consistent 69.52.  Your data varies by a few pennies from that value for reasons I did not try to track down (round function?).  Not sure that it makes any difference one way or another.  

    I would be adding a column for the amount at which to sell the Integrys shares with the equation (for row 15)
    IF(D15<50.94,C15+18.58*B15,IF(D15>69.52,C15,69.52*B15))
    In English, that is:
    If the basis / share is less than 50.94, sell the lot for its basis + 18.58 / share * no of shares (meaning cap gain is 18.58/share), else
    If the basis / share is more than 69.52, sell the lot for its basis (meaning the cap gain is zero), else
    Sell the lot for 69.52 / share * number of share (and the cap gain is between 0 and 18.58/share)
    That column of data will be helpful for your Quicken entries.  You can substitute other reference cells for the fixed values.  
    That column of data less the basis column should yield cap gains consistent with your column O which offers you anther way to compute the values.

    Overall, a very nice job.

    Now here is the next trick I'd be trying for 26 lots to deal with:
    a)  Enter the 26 Sell TEG and Buy WEC transactions.  It may be that you can consolidate the mid-group lots into one sale all at a 69.52/share rate.  The others should be sold at unique rates to produce the right cap gains.  
    b)  Create a new investment account for temporary purposes
    c)  Do a Shares Transferred between Accounts transactions to move all the WEC shares to the temporary account.  This will generate the Remove WEC shares you need in the real account.  
    d)  Reverse this with another Shares Transferred for the WEC from the temporary account back to the Real world account.  YOu now have all the necessary Add Shares transactions in the real world account.
    e)  Edit each of those Add Shares transactions to make the Acquisition date correct.
    f)  Delete the temporary investment account.  

    With two Shares transferred transactions and a few other cursory steps, you have generated the 26 Add Share transactions you need with most of the required info for those transactions.
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited December 2016


    Lurker,


    As I mentioned, here is my analysis of my particular case.  The original 82 shares were inherited from my father-in-law and the original basis was the step-up basis on his date of death.  All other re-investments were made by me on the dates as noted.


    If you wouldn't mind, please take a look and give me your comments.


    Thanks.

    A very comprehensive and helpful analysis. Thanks for spending your time on this.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • Unknown
    Unknown Member
    edited July 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    A prior answer, which I previously printed but can no longer find on line, said that for TEG lots with per share basis>50.94 but<69.52, not all the 18.58 cash received per TEG share would be recognized as cap gain as of 6/29/15 merger/reorg date (correct).  But the answer also said basis of WEC received would be GREATER than prior basis for that lot.  I think that was wrong.  I think the basis of the new WEC stock would be LESS by the amount of cash received that was not recognized as gain at merger, and thus accounted for in computing gain or loss on later disposition of the WEC stock.  Do you agree?  I note that the excellent free calculator at costbasis.com treats the cash received but not recognized as gain at merger as a return of capital REDUCING the basis in the corresponding lot of new WEC stock.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    This is the relevant form 8937 for this transaction as published by WEC.  


    Ref:  http://www.wecenergygroup.com/invest/integrys-irs-form-8937.pdf


    My breakdown of the steps is reflected in the attached printout.  How you proceed through the process depends on what price you paid for any particular Integrys (TEG) share.  Each lot should be processed individually.  The basic I use are:


    a) you sell the Integrys shares for the appropriate price, cash to your account,


    b) you buy the WEC shares for the appropriate price leaving cash received in your account


    c) you remove shares of WEC just bought


    d) you add Shares of WEC, same as just removed but specifying the applicable lot acquisition date (when you acquired the Integrys lot).


    e)  When complete for all lots, you sell any fractional shares for cash-in-lieu received.  


    That entire sequence leaves you with the right number of WEC shares at the right cost basis and with the right acquisition date such that future sales of WEC are properly recorded in Quicken with respect to long-term and short term capital gains and losses.  The sequence also gets your current capital gains correct with respect to the $18.58 / TEG share that you received.  That may be all cap gains income, some cap gains income, or none cap gains income depending on your basis on your TEG holding.


    HTH

    @dpjenkins23 : I believe you are correct.  If you originally had 100 shares of TEC with a total basis of $6,000 ($60/share) after this event, you would have 112.8 shares of WEC with a basis reduced to $5,094.05.

    You may have printed off the pdf file attached to my answer above (from 8/2/2015).  Therein I did incorrectly use greater than when the data clearly shows less than,
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