How to treat a conversion from an LP to a Corporation

Unknown

Yesterday, KKR converted from a LP to a Corporation. The number of shares and symbol stayed the same, and yesterday's close price is correct.  Quicken (2017 Premier Windows R16.2) is treating is as a $0 merger which shows a purchase and sale of my held shares at $0.  I thought I could just accept the transactions and be done with it, but now I have twice as many shares. If I look at the lots in the Investing / portfolio tab it just shows the addition of duplicate shares at zero cost.  If i look in the register, I see a sell of x shares at $0 and a purchase of x shares at $0, but the sale shows a share balance of -x (negative x) and the purchase shows a share balance of 2x.  Probably because the class of shares changed, so even though it has the same symbol, I "sold" the LP shares and purchased the Corp shares - but for whatever reason, the purchase just double my holdings. Do I just delete everything in the register (purchase and sale?)

Every time I try to edit the number of shares I seem to do something wrong, or it doesn't like my solution, and I never seem to be able to find the right solution.  I'm asking the experts this time!

K.O. (Win-Premier)

To the best of my knowledge Quicken doesn't know anything about mergers/acquisitions.  When you say "Quicken is treating it ..." do you really mean that transactions sent from your broker to Quicken show a sale and purchase?  The distinction here is that Quicken is getting data from a broker vs. Quicken having imbedded logic around this conversion and Quicken has no control over what brokers send it.

That said, how to handle it really depends on the tax treatment of the conversion.  Brokers many times will send Remove/Add or Sell/Buy transactions to Quicken when events like this happens but not knowing what broker you're dealing with and what actual transactions it sent to Quicken makes it difficult to deduce what the problem might be.

If there is no tax impact around this conversion then personally I would not enter anything and just keep the shares of KKR that you had before your broker sent the data (i.e. do not accept the broker transactions).  If the conversion has a tax impact you'll need to understand that tax impact in order to determine the appropriate action to take w/i Quicken.

Tom Young

Agree with K.O.  The conversion in and of itself is a non-taxable event and does not affect then number of units/shares you own:

"As a result of the
Conversion, holders of Common Units will become holders of Class A
Common Stock, which will continue to be listed on the NYSE under the
symbol "'KKR'".

I have to assume that you are simply accepting information provided by your broker into your Quicken file automatically - not a good practice, generally - so if I was a former partner, now shareholder, in KKR I probably would not make any entry in my Quicken file for this event beyond changing the name of the security if necessary.  (That is, if the previous name of the security identified it as a partnership interest of some sort I might delete that now obsolete information.)

Simply deleting whatever was entered in your file for the transaction should set things to right.

Unknown

To your question, yes, I approved and now see in my register:
1) A sale of all of my shares at $0 (the LP shares) Ticker KKR, and the register shows a share balance as a negative number equal to my original holding
2) A purchase of the same number of shares, which shows up in my register as 2x my original shares in the share balance

On my broker site, I see this descrition, which Quicken valiantly tried to make sense of: "
MERGER MER PAYOUT #REOR M0051132530000

(Cash)" with a symbol description as
"KKR & CO L P DEL COM UNITS"

That last part seems to be the key, as Quicken always listed the shares as just KKR, so somehow the broker reports it as "KKR & Co..." which is why I have a negative share balance.

On the acquisition side, it's listed as a "MERGER MER FROM 48248M102#REOR M0051132530001

KKR &CO INC CL A

(KKR)

(Cash)"  and the ticker is just listed as "KKR" which is how Quicken saw the original holding, and why i have 3x the number of shares, since it just added the same number of shares of the same symbol.

The whole distinction part is that the symbol is the same but the share class changed, so it was reported.   This is in an IRA, so I don't think it affects me tax wise, although I get a K1 from the old company, and don't with the new company.

Regarding your comments about Quicken not understanding mergers and acquisitions, I agree completely. there's probably no standard reporting from the various institutions, and Quicken just tries to make the most sense out of it that it can.

Should I just delete both merger transactions in the register, or is there some magic way to adjust the quantities so that I don't have double the value in my account with my original cost?

Unknown

and by the way, Tom - thanks for your advice and responding so quickly!  It's very much appreciated!

Unknown

K.O. (Win-Premier) said:

To the best of my knowledge Quicken doesn't know anything about mergers/acquisitions.  When you say "Quicken is treating it ..." do you really mean that transactions sent from your broker to Quicken show a sale and purchase?  The distinction here is that Quicken is getting data from a broker vs. Quicken having imbedded logic around this conversion and Quicken has no control over what brokers send it.

That said, how to handle it really depends on the tax treatment of the conversion.  Brokers many times will send Remove/Add or Sell/Buy transactions to Quicken when events like this happens but not knowing what broker you're dealing with and what actual transactions it sent to Quicken makes it difficult to deduce what the problem might be.

If there is no tax impact around this conversion then personally I would not enter anything and just keep the shares of KKR that you had before your broker sent the data (i.e. do not accept the broker transactions).  If the conversion has a tax impact you'll need to understand that tax impact in order to determine the appropriate action to take w/i Quicken.

KO - apologies for not acknowledging your quick answer and sage advice! Thanks!

q_lurker

@howdydoit:  Just to add a third voice into the mix ... 

I would delete all related downloaded transactions from the brokerage.  

I would review my security list.  Therein, I would change the ticker for the old LP to KKR(old).  Copy the prices from old to new.  Delete the old prices.  (those are default selections as I recall).  If that security has the box checked as Matched to Online security, I would uncheck that box.  

I would add a new company KKR & Co or similar if it does not currently show in your security list.  That company would get the ticker KKR.

Then in the transaction list for the account, Enter Transactions, Corporate Acquisition, and have KKR & Co acquire the KKR LP.  Quicken will generate a Remove Shares for the LP version and an Add Shares for the '& Co' version (for each lot if applicable).  

With your next download (maybe sooner), you'll have the opportunity to match the brokerages new KKR & Co holding to your new KKR & Co security in Quicken.  

While you may be fine treating these in Quicken as the same security, I would treat them as two different companies (securities) as outlined above simply because at the end of this year you will get a K-1 from the LP and a 1099-Div from the '& Co' version.  I would find it easier to match up data at year end.  But as this is an IRA holding, even that may not be significant enough to warrant two separate securities.  

The $0 sale that the brokerage sent is clearly the wrong transaction for Quicken.