How would I account for the ADVP merger with CMX? ADVP stock
was acquired in exchange for shares and cash. We received
shares and cash less a fee charged by Etrade.

Thanks,

Nick

I just posted an explanation of this merger on the Treas List, which I
am repeating below..

The merger between CMX and AVDP involved cash, so it is not a clean cut,
easy-to-record transaction. AVDP shareholders must compute gain/loss
using the total consideration received from CMX [both cash and market
value of CMX shares]. The lessor of cash received or such computed gain,
must be reported by AVDP shareholders.

Let's take an example. Assume we have 100 shares of AVDP with a
totalcost of $6,500. We will receive $7.01 per share in cash or $701
plus 1.935 shares of CMX. For the purpose of this merger, CMX has valued
their stock at 32.60465. Therefore, our total consideration is $7,010
[7.01 x100 + 193.5 x 32.60465]. Another way of looking at is that CMS
has valued the total consideration to be $7.01 per share of AVDP [100 x
7.01 = 7010].

Ok, we have total consideration of $7,010 and cost of $6,500, for a gain
of $510. We report the lessor of the gain or cash received of $701.
Therefore, we will report gain of $510. But we received cash of $701, so
to make the cash account balance we must account for the difference of
$191. Here's what we do. Enter a capital gain distribution for AVDP of
$510. Then enter a return of capital distribution for AVDP of $191. Then
enter a merger between the two companies, trading 100 shs of AVDP for
191.5 shs of CMX. Enter the cash in lieu of fractional shares received
from the broker.

Now, let's change the situation slightly. Assume our original cost was
not $6,500 but was $6,000. Now we have a gain of $1,010 [7010-6000]. Our
reportable gain is the lessor of that gain of 1010 or cash received of
701. Therefore, we must report only $701. Do it by entering a capital
gain distribution in the amount of $701, and then enter the merger as
before.

Finally, if the gain comes up to be a loss, you have no gain to report.
You must enter the $701 as a return of capital, and then record the
merger as outlined above.

As I said, it's not exactly clean-cut, but don't shoot the messenger <g>

Rip