On this page, you will enter the following information for the original security:
the date of the merger or exchange, and
the new cost basis.
Based on your selection on the Original Security screen, you will have the following three options for the new security:
Stock only
Cash only, or
Stock and Cash.
Note, according to tax law, a "merger" can have different tax implications depending upon whether the transaction qualifies under tax law as a redemption (taxable) or as a reorganization (tax-free).
When a merger is considered taxable, then all the lots of the old security have to be sold for a total amount equal to the cash consideration plus stock consideration. The new security then has to be bought for a total cost equal to the stock consideration.
When a merger is considered tax-free, if the cash/stock share ratio is not provided, then the cash consideration received should be treated as a dividend or capital gain.
If you selected the Stock only radio button in the Merger Type area, do the following:
In the New Security Name or Symbol/CUSIP field, click the magnifying glass icon. The Find Securities dialog opens.
Select the security and click OK. You are returned to the spin-off wizard and the Price Per Share field is populated.
In the New Price Per Share field, enter the new price.
In the Share Exchange Ratio field, enter the distribution ratio in decimal places. (Example: .50)
In the Are you receiving cash in lieu of fractional shares? field, click the Yes or No radio button.
If you select Yes, in the Cash in Lieu Price field, enter the amount of cash received.
If you select No, in the Fractional Shares field, click the Dropped or Rounded radio button.
Click Next.
If you selected Cash only in the Merger Type area, do the following:
In the Cash Price Per Share field, enter the amount of cash received.
Click Next.
If you selected Stock and Cash in the Merger Type area, do the following:
In the New Security Name or Symbol/CUSIP field, click the magnifying glass icon. The Find Securities dialog opens.
Select the security and click OK. You are returned to the spin-off wizard and the Price Per Share field is populated.
In the New Price Per Share field, enter the new price.
In the Stock/Cash Proration Factor field, select the Yes or No radio button.
If you select Yes, enter a decimal value in the Share Ratio Eligible for Stock. The Share Ratio Eligible for Cash field will auto-complete.
If you select No, click the Cash Consideration drop-down and select As Capital Gain or As Dividend.
In the Share Exchange Ratio field, enter the distribution ratio in decimal places. (Example: .50)
In the Are you receiving cash in lieu of fractional shares? field, select the Yes or No radio button.
If you select Yes, in the Cash in Lieu Price field, enter the amount of cash received.
If you select No, in the Fractional Shares field, click the Dropped or Rounded radio button.
Click Next.