How to handle the BG Group / Shell merger in Quicken

Peter Ruscoe
Peter Ruscoe Windows Beta ✭✭
edited May 2018 in Investing (Windows)
I'm struggling to enter the data for my UK shares. BG Group was taken over by Royal Dutch Shell. I received shares (in Shell) and cash for my BG shares. How do I enter this? (If I do it correctly, according to my research, my new basis will be different.)


Note: This conversation was created from a reply on: Corporate acquisition--cash and stock.

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    I can only comment with respect to the US aspects.  Everything I see in that context refers to this as a fully taxable transaction.  That basically means entering a Sell Shares transactions for the BG Group holding and a Buy Shares transactions for the new Shell holding, effective Feb, 2016.  The US documentation (US Tax Basis information) presents basis value for the Shell shares.  You would be selling the BG Group shares for a price that produces that same total amount.  

    How that all translates to UK shares and UK tax consequences, I have no idea.  
  • Peter Ruscoe
    Peter Ruscoe Windows Beta ✭✭
    edited May 2018
    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited April 2017

    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)

    From what I have picked out of the Form 8937 presentations on the site I linked to, the fairmark info does not appear applicable.  The Form 8937 data keeps citing 'taxable'.  The Fairmark citation considers "tax-free"

    The form 8937 data do not mention the cash component, but I did subsequently see a reference to some number of 'pence' included in the payout.

    Still from the US tax perspective, as I understand it (and I am not a tax pro, CPA, ...), you would have received RDS.A shares valued at $22.43/share, RDS.B shares valued at $22.33/share plus whatever cash you received (excluding cash in lieu received).  You would sell you BG shares for that total.  You would buy the RDS.A and RDS.B shares at those rates including fractional shares.  Then sell the fractional shares for the cash-in-lieu received.       
  • Peter Ruscoe
    Peter Ruscoe Windows Beta ✭✭
    edited April 2017

    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)

    Hmm. Yes, I see what you mean - I think. I received RDS.B shares, so I read that PDF. But now I'm even more confused.  The transaction didn't go quite as you describe. The shares were simply exchanged (though not one-for-one, of course) and I received a check for the cash amount. And I can't grasp the part about the new basis. It appears to be what the RDS.B shares were valued at on the day of the transaction, and that THAT amount is taxable. So where does the cash portion come into it? And, finally, I STILL don't know how to put the transaction(s) into Quicken.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited April 2017

    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)

    The shares were simply exchanged (though not one-for-one, of course) 
    While you are saying they were "simply exchanged", I am saying you need to treat it in Quicken (and for US tax purposes) as the BG Group shares were sold and the Shell RDS.B shares were bought.  

    Let's suppose you started with 100 shares of BG Group.

    Further, let me assume for those 100 shares you were due to receive 44.54 shares of RDS.B.  I have reason to believe the exchange ratio was 0.4454 but I am not solid on that, so I present it as an assumption, at this point.  

    Per the form 8937 on the website I cited, you 'paid' $22.33/share for those RDS.B shares.  That is your basis per share of RDS.B.  That becomes a total cost of those shares of $994.58.  

    Let's say further you received $483 or $4.83/BG share in cash (check).  That would make your total received at $1,477.58.  

    Finally, the one last point, they did not issue you the full 44.54 shares of RDS.B; they only distributed the integer number (44) shares.  You received the cash value of the 0.54 shares (the fractional share) as cash-in-lieu and that might have been, lets say, $12.25.  

    Now in Quicken, that becomes:
    1. Sell 100 shares of BG for $1,477.58
    2. Buy 44.54 shares of RDS.B for 994.58
    3. WithdrawX as a transfer to your checking account $483.00
    4. Sell 0.54 shares of RDS.B for the $12.25 (transfer to checking or however you got the cash-in-lieu credit).
    Substitute your numbers accordingly.  The only value I have real confidence in is the $22.33/share for the basis (price) of the RDS.B shares.

    The basic amount taxable (US perspective) is the difference between your cost of the BG Group shares and the $1,477.58 I made up.  That is, the taxable portion is the difference between your cost and the total value received (RDS.B shares x 22.33 + cash).  With my numbers, you bought the 0.54 shares for 0.54 x 22.33 = $12.06 and sold them for $12.25.  Strictly speaking, that $0.19 is also taxable, but most would also consider it below the threshold of interest.       
  • Peter Ruscoe
    Peter Ruscoe Windows Beta ✭✭
    edited April 2017

    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)

    That was MOST helpful. The only wrinkle is that the cash I received was way more than the value of the fraction of a share - 1441.33 pounds, to be precise. I've forgotten the terms of the takeover, but it was evidently "shares and cash." I'm not sure how to handle the GBP1441.33. I HOPE it isn't taxable income! Again, thank you so much - you are being very patient.
  • Peter Ruscoe
    Peter Ruscoe Windows Beta ✭✭
    edited April 2017

    Thank you, q.lurker. I am resident in the US, so I have no UK tax consequences. I found a document at www.fairmark.com/capgain/mergers.htm that supposedly gave an explanation of how to report it. But that still left me puzzled as to how to enter it in Quicken. (The market price of the Shell shares on the day of the takeover totaled roughly double the value of the BG shares, AND I received cash.)

    Oh - wait - I re-read your response. I think you've given me most of what I need. I'll chew it over with my (real) numbers and report back!
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