Record Williams Company buying Williams partners LTD

Question

I am using Quicken premier 2017 & running Windows 10 .  I used the transaction "Corporate Acquisition  " input the company acquired , acquiring company in this case Williams Company, new shares , old shares & showed the stock price at close of transaction.  When I ht done my portfolio balance show doubled .  Has anyone successfully recorded  Williams Company acquiring Williams Partners LTD and if so the transaction used ? .

q_lurker · Answer

Those are the two parts I can't answer very directly.

Determining cost basis -- Depends on the information on the cumulative K-1s you have received since your purchase of the Partners units.  In essence, those K-1s should show your share of the partnership's income and expenses.  Each year, the partnership made money or lost money and your (presumably) reported those on your tax returns each year as net income or a net loss.

Secondly, the K-1s should have reported the distributions made to you by the partnership.  If those distributions happened to match the net income, there would be no change to your basis.  More likely, the distributions were different than the net income and your basis would go down (if they distributed more than they made) or go up (if they distributed less than they made).

So if the money is not significant (in your eyes or the IRS's eyes?), you might go with what you paid and be done with it, but to do it right, you need to get all those K-1s and other information in front of a tax professional (CPA or similar), 'cuz like I said, I ain't one!

Getting the info into Quicken -- sort of depends on what you need and want and what info comes out for the real-world picture (the tax pro's advice).  Going with what you paid is simple - You bought the shares (units); now you sell the shares (units).  If you need to adjust the basis before the sale, you can typically do that through RtrnCap transactions (check the results closely), or by using a Remove Shares / Add Shares pairing where the Add Shares includes the newly adjusted basis information.

There is a lot of information I DON'T know about this stuff, so proceed cautiously (my prior caveat!).

Jeff Richards · Answer

Thank you for the very detailed analysis.  I appreciate your analysis .  My holdings were 433 shares of Williams Partners & now 646 shares of Williams Company.  I failed to record in August 2018 when transaction happened.

I have the purchase date and price per share when I purchased Williams Partners.  Question I have for you is how do I determine your cost basis of the WPZ holding and get that into Quicken

q_lurker · Answer

From the link Jim provided, I noted this answer in particular (emphasis added):  * The receipt of Williams Common Stock and any cash in lieu of fractional shares of Williams Common Stock in exchange for WPZ Public Units pursuant to the Merger should be a taxable transaction to U.S. holders (as defined in the section titled “Material U.S. Federal Income Tax Consequences”) for U.S. federal income tax purposes. In such case, a U.S. holder will generally recognize capital gain or loss on the receipt of Williams Common Stock and any cash received in lieu of fractional shares of Williams Common Stock in exchange for WPZ Public Units.  ...

What that usually means is that this is really a sale of the WPZ units and a Buy of the WMB shares.  It is not a Corporate Acquisition.  The ensuing complications are (I believe) a consequence of the WPZ unit partnership and associated oil & gas leasing and taxation rules.  Scanning the information following what I quoted, I think all that is inherent in determining the cost basis of the WPZ holding without regard to the timing or circumstances of the sale.

a) you need to accurately determine your cost basis of the WPZ holding and get that into Quicken (if you expect it to be right).
b) you then sell the WPZ holding for $47.494 / unit (31.79 * 1.494)
c) you buy the WMB shares (1.494 / unit of WPZ that you had) at $31.79/sh if I am reading that right.
d) you sell the fractional share of WMB at $31.02/sh if I am reading that right.

If you had 10 units of WPZ, you would be due 14.94 shares of WMB which you would be buying at 31.79 for $474.94.  That is your selling price for 10 WPZ units.  You turn around and but 14.94 shares of WMB for 474.94, then sell 0.94 shares at 31.02 for $29.16 which should match the cash-in-lieu amount you received.

Caveat: I am not a tax guru, professional, financial adviser, yada, yada.  I am also not an investor in WMB or WPZ.  I am nameless and faceless with a screen and a keyboard.  I've spent less than 30 minutes on this.  Do your own due diligence.