Our club initially held 240 shares of McLeod USA. On May 14th, MCLD did a .058584 to 1 reverse stock split. On May 20th, our club was charged a "Mandatory Reorganization Fee of $20.
 
Our Ameritrade statement shows the 240 shares as:
  McLeod USA Contra - Do Not Sell and shows a value of $.001.
 
The statement also shows are new shares (14).
 
Does anyone know how to account for this transaction? Are the old shares effectively gone and therefore our original cost is now the basis for the 14 new shares.
 
Thanks,
Aaron

Are you using bivio for your accounting? Is so, it handles
the merger nicely (and easily). If you're entering the
transaction manually just go to your MCLD investment and
click the merger button (enter date, new ticker=MCLD, new
shares=14.06016, and cash received for fractional shares
(from your ameritrade statement). That's it, except for the
reorg fee, which is entered seperately as a miscellaneous
deductible expense (service fee).

Account sync (which we use) handles these complicated things
very well.

You actually received 14.06016 shares in the split.
Ameritrade should list a "cash in lieu of fractional shares"
which was added to your cash account for the sale of .06016
shares (since you can't hold fractionals in Ameritrade).
This amount is accounted for as a capital gain (or loss,
short term or long term, depending on how long you've owned
MCLD).



Aaron Schroeder wrote:
> Our club initially held 240 shares of McLeod USA. On May 14th, MCLD did a .058584 to 1 reverse stock split. On May 20th, our club was charged a "Mandatory Reorganization Fee of $20.
>
> Our Ameritrade statement shows the 240 shares as:
> McLeod USA Contra - Do Not Sell and shows a value of $.001.
>
> The statement also shows are new shares (14).
>
> Does anyone know how to account for this transaction? Are the old shares effectively gone and therefore our original cost is now the basis for the 14 new shares.
>
> Thanks,
> Aaron