>>KRB merged with BAC, on 01/03/2006.  Not only did
shareholders get 0.5009 for every share of KRB, they also
received $4.125 in cash for each share held as well.

>>My question is this:  How do I enter the CASH received in
BIVIO?

>>Do I discount the principle investment into KRB?

>>Example:  $716.50 invested into KRB.  Received $131.71 from
merger payout.  $584.79 invested into BAC?

>>If so, how do I enter it?  If not, how do I enter it>?

You have to determine whether the cash is a capital gain or a return of capital or both. Then you make the appropriate entries to KRB. Then you merge the stock. Then you sell any fractional shares.

 

You should receive information from your broker (or it may be on the corporate website) on how to determine how to report the cash payment.

 

Simply put, if the value of stock and cash received is greater than your KRB cost basis, you will report capital gain of the lesser of cash received or calculated gain. Any excess cash received is a return of capital.

 

Ira Smilovitz