Considerations
You can find information on the tax implications within the "Certain Federal Income Tax Consequences" section of the company's prospectus. If you have not received a prospectus for the merger, you can request one from the company's investor relations department, or contact your broker. In many cases, you can also locate the tax consequences in the investor relations section of the company's website.
Click here if you received cash only
Record a Sell using these guidelines:
Sell Date = Merger effective date (the date set by the company and stock exchange for de-listing the old security).
Shares = Your original number of Shares.
Price = The cash amount received per share
Click here if you received shares only, and the merger was a non-taxable event (NT)
A. Record a Withdraw Transaction to remove the old stock using the following guidelines:
Withdraw Date = Merger effective date (the date set by the company and stock exchange for de-listing the old security).
Shares = Your original number of Shares.
This approach will correctly remove your position without creating a gain or loss for this non-taxable event.
B. Record one Deposit Transaction for the new stock for each old lot:
Purchase Date = Lot date of the old stock (as listed on your unrealized report).
Deposit Date = Merger effective date.
Shares = The number of new shares received for this specific lot, calculated by multiplying the old shares by the new share ratio. The "new share ratio", like .5, determines the number of new shares received for each old share.
Cost Basis = Total cost of the old lot (as listed on your unrealized report).
Click here if you received shares only, and the merger was a taxable event (T)
Calculate the value of new shares received by multiplying the new share ratio (The "new share ratio" determines the number of new shares received for each old share you own) by the fair market value (FMV) of the new shares on the effective date of the merger as supplied by the company. For example, if the FMV was $10.00 and your new share ratio was .5 (i.e. you received .5 share of the new stock for each old share you owned), your new share value would be $5.00 ($10*.5). This value becomes your sell price.
A. Record a Sell in GT using these guidelines:
Sell Date = Merger effective date (the date set by the company and stock exchange for de-listing the old security).
Shares = Your original number of Shares.
Price = The new share value.
B. Record one buy for your total new shares received:
Buy Date = Merger effective date (the date set by the company and stock exchange for de-listing the old security).
Shares = The total number of new shares received calculated by multiplying the total old shares by the ratio of new shares received.
Price = The FMV of the new stock on the effective date.