How do you handle a merger transaction in Quicken for Mac?

Geo H

The recent merger of KSU and Canadian Pacific (CP) resulted in KSU stockholders receiving $90 in cash and 2.884 CP shares for each KCS common share held. How do you handle such a transaction in Quicken on both sides. I had no CP shares prior to this merger?

Jon

I did a little reading on how cash received in a merger should be handled for tax purposes & the short answer is "it depends", so you'll have to work that out on your own. I think I would figure out how much of the cash you received (if any) is a capital gain & record it as such, and if there's any remaining cash that was not a capital gain record that as Miscellaneous income.

Jon

When I owned a stock that got merged into another company (Pixar, acquired by Disney), I added two transactions - a Remove Shares transaction to get rid of the Pixar shares and an Add Shares transaction for the new Disney shares. But in that case there was no cash component, it was just a stock swap.

In your case you could do it a couple ways, I'm not sure which would be best. One would be to do something like what I did - remove the KSU shares and add the CP shares, and then have another transaction to record the incoming cash, either as a Miscellaneous transaction or maybe as a Capital Gain, depending on how this merger is handled on your taxes.

The other thing you could do is record it as a sale & a purchase. The sale price for the KSU stock would be $90 plus the value of 2.884 CP shares on the date of the merger. But again, it would depend on how this is being reported for tax purposes. 

Jon

I did a little reading on how cash received in a merger should be handled for tax purposes & the short answer is "it depends", so you'll have to work that out on your own. I think I would figure out how much of the cash you received (if any) is a capital gain & record it as such, and if there's any remaining cash that was not a capital gain record that as Miscellaneous income.

Geo H

Thanks for your time Jon; I appreciate it. I followed your suggestion and things look fine.