Merger and CUSIP/symbol change (twice)

kydar

(symbols and dollar amounts changed to keep it simple)

In March 2017 I bought 36 shares of AAA for $1000. In 2019, AAA was acquired by BBB. In a 3-for-4 exchange, I received 27 shares of BBB. 3 months after that, BBB changed their symbol to CCC (with a different CUSIP). So now I have 27 shares of CCC with a cost basis of $1000. But Quicken doesn't show it that way. Here is what it shows:

AAA: bought 36 shares in 2017 for $1000, removed 36 shares in 2019 for $1000. Even though the price was different than $1000 in 2019, this seems reasonable as it preserves the cost basis. So far so good.

BBB: 27 shares added in 2019. Cost basis $0. Uh-oh. Not sure why the cost basis did not transfer or the best way to fix that. I could just edit the transaction and add a Total Cost, but is this the correct way to do it? Also, these 27 shares still show up in the account today even though they should have been removed when BBB changed names to CCC.

CCC: 27 shares added in 2019. Cost basis $0. Same thing as above. Best way to adjust basis? Also, the date acquired is in 2019. I am not sure in the IRS's eyes if this is correct, or should I set it to the 2017 date when I originally bought the 36 shares of AAA? Honestly, I am not planning on selling it anytime soon so the short-vs-long-term gain/loss isn't really an issue - I just like things to be *correct*.

Thanks in advance if anyone can help me sort this out.

Tom Young

"(symbols and dollar amounts changed to keep it simple)"

The dollars don't really matter, but it's best to reveal the actual ticker symbols involved with these sort of transactions because 2 different transactions that on the surface look exactly the same can require completely different accounting entries.

One thing you should take away from this is that the transactions pushed down to you by the financial institution for these "corporate actions" are not necessarily the correct accounting entries.  That's why you really should not automatically accept transactions - especially corporate action transactions like mergers, acquisitions and the like - automatically. 

The initial transaction should have been recorded using the "Corporate acquisition (stock for stock)"  action.  That would have entered a Remove action in your transaction list for the AAA stock and then an Add (or multiple Adds) for each lot of BBB received, with the cost basis and the date of acquisition preserved for the AAA lots tendered..  I'd suggest backing up the file and deleting the initial Remove/Add transactions. Then, using the correct 2019 date, doing the Corporate acquisition (stock for stock) action to get your BBB stock correctly stated.

If BBB then changed its ticker and CUSIP to something else (actually, that sounds like another corporate action occurred), then you could use that same Corporate acquisition (stock for stock) action on that date.

Tom Young

As the Union Bankshares name/ticker/CUSIP change didn't involve an acquisition/merger event then another approach to the "second half" of your transaction could be to simply edit the UBSH security to correct the name and ticker symbol.  The CUSIP change should come from the FI holding the account.  Again, backup, try it and see if that works.  Changing the name and ticker should allow you to carry over the historical quotes of UBSH to AUB.

kydar

I guess I should have noted, I did not manually enter any of those transactions; they were all imported in .QFX files from the broker (Interactive Brokers). I honestly don't know if IB just didn't put the right information that Quicken needed to properly handle the transactions, or if Quicken just had trouble understanding them. That said, I'm not really interested in placing blame anywhere; I just want to fix it.

Tom Young

"(symbols and dollar amounts changed to keep it simple)"

The dollars don't really matter, but it's best to reveal the actual ticker symbols involved with these sort of transactions because 2 different transactions that on the surface look exactly the same can require completely different accounting entries.

One thing you should take away from this is that the transactions pushed down to you by the financial institution for these "corporate actions" are not necessarily the correct accounting entries.  That's why you really should not automatically accept transactions - especially corporate action transactions like mergers, acquisitions and the like - automatically. 

The initial transaction should have been recorded using the "Corporate acquisition (stock for stock)"  action.  That would have entered a Remove action in your transaction list for the AAA stock and then an Add (or multiple Adds) for each lot of BBB received, with the cost basis and the date of acquisition preserved for the AAA lots tendered..  I'd suggest backing up the file and deleting the initial Remove/Add transactions. Then, using the correct 2019 date, doing the Corporate acquisition (stock for stock) action to get your BBB stock correctly stated.

If BBB then changed its ticker and CUSIP to something else (actually, that sounds like another corporate action occurred), then you could use that same Corporate acquisition (stock for stock) action on that date.

kydar

The original ticker was ANCX, which was acquired by UBSH, which then changed its ticker to AUB. Thank you for your help and yes, these were all listed on my Interactive Brokers statements as "corporate actions." I've found a few more of those CA's with other tickers in my portfolio that are messed up, but I think your suggestions will give me a way to fix them. I will mark this thread as solved if everything looks good after I try the things you said.

Tom Young

As the Union Bankshares name/ticker/CUSIP change didn't involve an acquisition/merger event then another approach to the "second half" of your transaction could be to simply edit the UBSH security to correct the name and ticker symbol.  The CUSIP change should come from the FI holding the account.  Again, backup, try it and see if that works.  Changing the name and ticker should allow you to carry over the historical quotes of UBSH to AUB.

kydar

Many thanks to @"Tom Young" for taking the time to answer my questions.

Tom Young

" I'm not really interested in placing blame anywhere; I just want to fix it."

As far as I know there's no "programming" behind Quicken importing information pushed to it beyond simply accepting the information as it reads.  The onus really is on the FI to structure the download correctly.  So if the FI decides an Add action is appropriate then they have to provide all the information needed, exactly "as if" you entered that Add transaction manually, and they don't always do that.  Posts along the lines of yours show up in here all the time when corporate actions occur. 

So "best practices" here if you want your Accounts to be correct is review these transactions before allowing them into your transaction list or, at the very least, reviewing these transactions as soon as possible when they show up.