[GNC] Stock Merger

[Geoff]

Hi Al

We need to tweak your transactions to fix the cost basis on the Advanced 
Portfolio Report.

Also from a tax accounting perspective, there are two ways to treat this 
merger, depending whether it realised a capital gains event or not. 
I'll cover both scenarios from a GnuCash perspective, but please note 
that I am not an accountant.

For simplicity, I will assume that you bought the 800 XLNX shares at 
$150 for a total cost basis of $120,000 ($150 x 800).

You said that you received $85.65 for the 0.72 fractional AMD shares. I 
think that this has realised a small capital gains event because you 
effectively sold them as part of the merger and received cash in 
consideration.

By my calculations, this values 1 AMD share at $118.958333 (85.65 / 
0.72), and the total transaction at $164,010.23 ($118.958333 x 1378.72), 
and hence values the XLNX shares at $205.0127875 ($164,010.23 / 800)

Scenario 1 - Not a Capital Gains Event
AMD inherits the XLNX cost basis of $87.03725 per AMD share ($120,000 / 
1378.72).
Realised capital gain of $22.98 on sale of 0.72 AMD fractional shares.
  - See attached screenshot "gnc_merger_no_capital_gain.jpg"

Scenario 2 - Merger IS a Capital Gains Event
XLNX shares effectively sold for $205.0127875 ($164,010.23 / 800).
Realised capital gain of $44,010.23 on XLNX.
No capital gain on sale of 0.72 AMD fractional shares.
AMD cost basis is $118.958333 per share ($164,010.23 / 1378.72)
  - See attached screenshot "gnc_merger_capital_gain.jpg"


Note that your total capital gains are identical under both scenarios, 
the difference being when they are realised (or not).

Note also that while I used the GnuCash "Lots" facility to generate the 
capital gains transactions for these scenarios, this can be a confusing 
tool for the uninitiated, and you can just as well enter them directly.

Hope this helps.

Regards

Geoff
=====
P.S. Apologies David for cutting in on this thread.


On 18/02/2022 5:07 am, Al wrote:
> David Carlson wrote:
>> You are very close!  Yes, you do need to create a new security and 
>> security account under your broker account for AMD first.  Then you 
>> could re enter or possibly just edit your split transaction to output 
>> in AMD instead of XLNX.
> 
> Thanks David. I ended up editing the splits. Not sure if it is 100% 
> correct but I did end up with 1378 shares of AMD, 0 shares of XLNX and 
> no imbalances.
> 
> One thing that I noticed is that running the Advanced Portfolio Report 
> shows a cost basis of $0.00 for AMD. If that's the only problem I'm OK 
> with that as it's easy enough to figure out the cost basis whenever I 
> might sell.
> 
> I've attached the images of the splits, please let me know if this looks 
> reasonable.
> 
> Thanks!
> 
> Al
> 
On 17/02/2022 3:30 pm, Al wrote:
> I'm having trouble getting my head around setting up a stock merger. The 
> merger in question is the recent Xilinx AMD merger.
> 
> Pre-merger I held 800 shares of XLNX. After the merger I have received 
> 1.7234 shares of AMD for each XLNX share (1378.72 shares). I received 
> $85.65 "Cash in Lieu" for the .72 shares leaving a total of 1378 shares.
> 
> Using the Gnucash Stock Split Assistant to the best of my abilities 
> results in me now having 1378 shares of XLNX along with the $85.65 
> correctly added to the cash account at my brokerage.
> 
> So how does XLNX become AMD? Am I supposed to create a new AMD entry and 
> transfer the shares somehow? Or maybe just change the name and ticker 
> symbol?
> 
> Any help greatly appreciated!
> 
> Al
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