club_cafe: Re: Re: MBNA Merger Transaction: Question?

iras1 on

In a message dated 1/5/2006 2:56:32 P.M. Eastern Standard Time, biegelboy@bivio.com writes:

Sorry...I didn't see your posting, when I posting that.

I was commenting on the posting that adviced to get a broker
who allows AccountSync.

But...I do have a few more questions:

(1) Do I enter the CASH RECEIVED as RETURN OF CAPITAL to
KRB prior to doing the MERGER transaction? Or - Do I do the
MERGER transaction first and enter the CASH as RETURN OF
CAPITAL for BAC?

Probably neither. See below.

(2) My club purchased KRB stock back in 2002 - we bought
into KRB twice (no to mention reinvested dividends) in 2002
01/28/2002 - 10 shares + 07/15/2002 Stock split 5 shares and
11/14/2002 - 15 shares.

You are going to have to look at each block of shares, including each reinvested block of shares independently. For each block, you will have to determine whether the cash received is return of capital or capital gain.

Does this mean the RETURN OF CAPITAL is Long-term? Or
Long-term post May 2003 (one of the many Bivo selections).
If not, what sorta Return of Capital gain is it?

Return of Capital is just that. If a cash receipt is Capital Gain, you'll have to determine whether it's short-term or long-term based on the holding period of the shares involved.

31.93 total shares of KRB = TOTAL Capital Investment
$716.23

Received $131.71 in CASH and 15.994 shares of BAC via
merger.

Once you complete all of the calculations, determine the total Return of Capital, total Short Term Capital Gain distribution, and total Long-Term Capital Gain Distribution. These three amounts should be entered into bivio. Then you can enter the merger using the appropriate ratio of shares. Include any cash in lieu at this point.

Unfortunately, while this will provide the correct results in aggregate, it will not correctly adjust the cost basis on an individual block basis.

Jim Thomas has created a spreadsheet that can run the calculations for you. It can be found at http://www.nwlink.com/~jimt075/StockCashMerger.xls

Ira Smilovitz

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