Quicken for Windows
How to enter meger Anchor bankcorp with FS Bankcorp
edited December 2018
On Nov. 16 Anchor Bancorp (ANCB) merged with FS Bancorp (FSBW) for Stock and cash. Wondering how to enter this transaction?
edited December 2018
The proxy statement/prospectus that you received with respect to this merger spells out the income tax consequences to Anchor Bankcorp shareholders and you'll want to make your entries in Quicken to reflect the required income tax accounting.
Subject to the foregoing, the material U.S. federal income tax consequences of the merger to U.S. holders of Anchor common stock will be as follows:
Gain (but not loss) will be recognized on the receipt of the merger consideration in exchange for Anchor common stock pursuant to the merger in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the FS Bancorp common stock on the date of the completion of the merger and cash (other than cash received instead of a fractional FS Bancorp common share) received by a holder of Anchor common stock exceeds such holder's tax basis in its Anchor common stock, and (2) the amount of cash received by such holder of Anchor common stock (other than cash received instead of a fractional share of FS Bancorp common stock, which will be taxed as discussed in the section entitled "Cash Received Instead of a Fractional Share of FS Bancorp Common Stock" below);
The aggregate basis of the FS Bancorp common stock received in the merger will be the same as the aggregate basis of the Anchor common stock for which it is exchanged, decreased by the amount of cash received in the merger (except with respect to any cash received instead of a fractional share of Anchor common stock), decreased by any basis attributable to a fractional share of Anchor common stock for which cash is received, and increased by the amount of any gain recognized on the exchange (regardless of whether such gain is classified as capital gain, or as ordinary dividend income, as discussed below, but excluding any gain or loss recognized with respect to fractional interests in FS Bancorp common stock for which cash is received); and
the holding period of FS Bancorp common stock received in exchange for Anchor common stock will include the holding period of the Anchor common stock for which it is exchanged.
If a U.S. holder of Anchor common stock acquired different blocks of Anchor common stock at different times or at different prices, any gain or loss, when recognized, will be determined separately with respect to each block of Anchor common stock and such holder's basis and holding period will be determined by reference to each block of Anchor common stock. If a U.S. holder determines that it has a loss with respect to any block of shares, such loss cannot be recognized as part of the merger and cannot be used to offset any gain recognized in the merger. Any such holder should consult its tax advisor regarding the manner in which gain or loss should be determined for each identifiable block of Anchor common stock surrendered in the merger and with respect to determining the bases or holding periods of the FS Bancorp common stock received in the merger.
This is very typical boilerplate that you see for these stock plus cash acquisitions that require a lot-by-lot
calculation, that specify no losses may be recognized, and limit any
gain to the lesser of cash received or the gain you obtain when you treat the stock plus cash received as "proceeds" minus your basis
in the stock tendered.
At some point FS Bancorp or Anchor Bancorp will probably post a
Form 8937 on their website with their opinion of what "fair market value" to use for a share of FS Bancorp
in the calculation of your "proceeds" but you are free to develop your own number; there's no "cookbook" method of determining that figure. The Open, High, Low and Close of FS Bancorp's stock on 11/16/18 was
Open High Low Close
You may want to wait for the Form 8937 before doing your accounting in Quicken, though that's not strictly necessary.
First and foremost though, if you have multiple lots you must make your calculations
outside of Quicken
. There's no "shortcut" that avoids that if you want accuracy. So you list out, presumably in a spreadsheet, for each lot:
its date acquired, (it's best to list them in chronological order, oldest first)
how much cash was received for the lot,
how many "new" shares were received for those shares,
the total "proceeds" received for that lot which is (number of shares received x per share fair market value) + cash, and
the gain for each lot which is the lesser of cash receive or the gain based on "proceeds" minus basis.
If you have a loss for a particular lot you enter $0 in its "gain" column.
On the same line for each listed lot you can also calculate your basis in "new" shares received which is: old basis - cash received + gain recognized for that lot, (obviously $0 for loss lots.)
Now summarize your gains, if any, into short term and long term gains. Using only the cash received for your short term holdings, derive a basis to use against that cash to come to the short term gain you've determined. Likewise, using only the cash received for your long term holdings, derive a basis to use against that cash to come to the long term gain you've determined.
If you've done all this then you're ready to make your entries into Quicken so:
Make one entry to Remove all old shares
Make one entry to Add back your old short term shares using any date that makes the new "lot" short term and using a per share cost that comes to the derived basis determined above.
Make one entry to Add back your old long term shares using any date that makes the new "lot" long term and using a per share cost that comes to the derived basis determined above.
Sell your short term and long term holdings for the cash you received for each "lot'.
At this point your cash (before cash in lieu) is properly stated in Quicken and your long term and short term gains are properly stated.
Now do a series of Add actions to establish each lot of "new" shares using an appropriate "acquired" date (same as date of lot tendered) and an appropriate per share cost to come to the basis you calculated for each lot.
Then you sell whatever fractional shares you "should have" received for the cash in lieu, recognizing a gain or loss as appropriate.
If you have a lot of shares then it's a fair amount of work, though using the power of Excel you can pretty much reduce the Excel "entry" effort to listing out the date of acquisition, number of shares and per share cost of each of your "old" shares.
edited December 2018
Tom Young has capably presented a very workable approach for this type of transaction. I apply a slightly different sequence. Our basics are summarized in spreadsheet form for a different (but similar) merger toward the bottom of this discussion.
If you have a limited number of lots and want to share their specifics, I might be able to detail my approach.
If you have a lot of lots (perhaps from a dividend reinvestment plan), there may be some helpful 'tricks' to apply to generate some of the basic transactions (subject to editing each one).
This discussion has been closed.
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