How to handle a stock merger or exchange?

till

Recently it appears Vanguard funds have changed some symbols on some of their funds I track in the Quicken portfolio. I believe that this is either an "exchange" or a merger to a different asset class( Investor shares to Admiral shares). How do I handle this in the Quicken portfolio transactions?

Jim_Harman

The proper transaction for a tax free share class conversion would be a Mutual Fund Conversion. Click on Enter Transactions and select it from the list.

However the Mutual Fund Conversion does not work correctly if you have chosen Average Cost as your cost basis method. To see this setting, go to the Security Detail view and click on Edit Security Details. If you have been using the Average Cost option, you must use the Corporate Acquisition transaction instead. The downside of this is that if you hold the security in multiple accounts, it will affect those accounts as well.

See this discussion
https://community.quicken.com/discussion/7858412/mutual-fund-conversion-erroneous-cost-basis

 

Jim_Harman

The proper transaction for a tax free share class conversion would be a Mutual Fund Conversion. Click on Enter Transactions and select it from the list.

However the Mutual Fund Conversion does not work correctly if you have chosen Average Cost as your cost basis method. To see this setting, go to the Security Detail view and click on Edit Security Details. If you have been using the Average Cost option, you must use the Corporate Acquisition transaction instead. The downside of this is that if you hold the security in multiple accounts, it will affect those accounts as well.

See this discussion
https://community.quicken.com/discussion/7858412/mutual-fund-conversion-erroneous-cost-basis

 

till

I should have mentioned that I download transactions from my brokerage into Quicken using WebConnect. Will this make the conversions automatically? I actually haven't yet downloaded any yet from the time period where Vanguard made the change, but I am getting a pop up box that asks me to "Match Security" of the new symbol to an old one. Do I just do that instead?

NotACPA

It's more than a little unlikely that Vanguard will download this properly.  Use the Conversion Wizard, and then see what's downloaded.

Jim_Harman

Vanguard will probably download transactions to make the conversion, but they will probably not be correct.

If you are not using the Average Cost method to compute capital gains as described above, you will be better off entering the Mutual Fund Conversion manually and not accepting any Added or Removed transactions related to this fund. The Mutual Fund Conversion will create the new Admiral security for you and you should match to that when asked.

Back up your data file before entering the conversion, in case something goes wrong.

till

Since I have used the AVG Cost method, based on the above I should enter the transactions using the Corporate Acquistion box. That box asks for "Company Acquired" and "Acquiring company. Which is which? for example the old symbol was VTSMX and the new symbol is VTSAX. I appreciate your help in this.

Jim_Harman

The company acquired is the Investor shares (VTSMX), the acquiring company is the Admiral (VTSAX).

Make sure all transactions including any reinvested dividends prior to the change have been downloaded before doing the acquisition so the share count is correct before you start.