BankAmerica - Merrill Lynch Purchase

Which transaction do I use to enter the purchase of Merrill Lynch by BankAmerica? For each share of Merrill Lynch we received .8595 shares of BankAmerica. BankAmerica 12/31 closing price was $14.08 and Merrill Lynch was $11.64.

I tried using the Corporate Acquisition (Stock for Stock) transaction but it changed the date of all the Reinvested Dividend transactions to the date of the purchase

01-01-09 and the action to Added.

Any help appreciated. Thanks.

Phil B.

Your first post on this subject was received here; please show caution before posting the same problem twice. Thirty minutes is not close to enough time to wait to see if your post was successfully transmitted.

I deleted the first post because I added additional info. Did I do something wrong?

Phil B.

"Phil" wrote in news:V7OdnfXVte- tWf3UnZ2dnUVZ snipped-for-privacy@earthlink.com:

It's generally best to keep things in a single thread. That's all. Don't let the cabal intimidate you. Just do as is customary .

Also, in usenet it is customary (mostly) to add your next bit of wisdom to the bottom, so the story reads from top to bottom.

"Phil" wrote in news:naKdnapr94oNiP3UnZ2dnUVZ snipped-for-privacy@earthlink.com:

I have struggled with these things myself. Usually the investor site of the purchasing company gives info on how to handle this. Something like so many (whole!!) shares of Merryl will give you so many (fractional) shares of BofA. Any leftover fractional shares of Merryl are returned as a return of capital. But don't let me be the official voice - far from it.

I thought I had a reasonable cap gain from my HPQ holdings, until I found out that most of them came from my Compaq shares bought at what turned out to be inflated prices.

The first post wasn't deleted; it's still here.

It is considered discourteous to make the same post more than once; all those who read the posts here must read it twice.

Also it tends to produce disjointed discussions; some users will answer one of the original posts, while different users answer the other original post. Much harder to have a useful discussion that way, and increases the likelihood of getting duplicate answers.

If you want to add information to your own post, you can just "reply" to it.

As to your concerns about the Corporate Acquisition: I don't understand them. That is the correct transaction.

The Corporate Acquisition does not change the date of existing transactions.

The "transaction" date of the Add Shares transactions should be the date of the Corporate Acquisition: you can assure that is true when you create the Corporate Acquisition transaction. If the acquisition occurred on Jan 1,

2009, then that is the correct date; if not, you entered (or allowed Quicken to enter) the transaction date incorrectly. You can manually modify that date on the resulting transactions (or delete the generated transactions and re-enter the Corporate Acquisition).

But if you Edit those Add Shares transactions, you'll see that they also have an "acquisition" date ... which is the date you originally purchased the shares of the company being acquired. That (your original) "acquisition" date will be used to determine short/long term gain if/when you sell the shares of the acquiring company that you now own.

Yes.

You may think you deleted the first post, but all you really succeeded in doing was deleting it from *your* machine. Doing what you did results in two separate threads, and makes it much harder for you or anyone else to follow what's going on.

The correct way to add additional information is to reply to your own original message and add whatever you want in that reply. That keeps both of your messages in the same thread.

Hi, Phil.

I hope that Bank of America will provide more detailed information about the Merrill Lynch acquisition soon. The bare minimum is on this page, but they should produce more guidance than shown here:

40029&highlightMost of that page is marketing and public relations. The only parts you need are the first line, which provides the effective date..."CHARLOTTE, N.C., Jan. 1 /PRNewswire/ -- Bank of America Corporation today completed its purchase of Merrill Lynch & Co., Inc." and this paragraph, which tells you what you already knew: "Under terms of the agreement, shareholders of Merrill Lynch received .8595 shares of Bank of America common stock for each common share of Merrill Lynch."

But you also need to know the amount paid to you for any fractional shares of BAC to which you were entitled. The news release does not even mention fractional shares. The final quote for ML does not matter, but you will need to know your basis (usually, your cost) for your ML shares. Quicken should already know your basis for your ML shares and should use that to calculate your basis in your new BAC shares.

You will need to record TWO transactions in Quicken. The first will be the Corporate Acquisition, dated 1/1/09, apparently. This will, in all likelihood, produce a number of whole shares, plus a fractional share. The second transaction will be a straightforward Sell of the fractional share for cash, also on 1/1/09.

For example, if you held 100 shares of ML, then you would be entitled to

85.95 shares of BAC. You would receive 85 shares, plus cash for your .95 fractional share (.95 * $14.08 = $13.38). If you had paid $5,000 ($50 per share) for ML, your basis in your 85.95 new BAC shares would be $5,000/85.95, or $58.17 per share; your basis in the .95 share sold would be $55.26, giving you a capital loss of $41.88. Your loss would be short-term unless you acquired your ML shares before 1/1/08. Your 85 new BAC shares would have a basis in your hands of $5,000 - $55.76 (for basis of the sold fraction) = $4,944.24, or $58.17 per share; the holding period in your hands would begin when you acquired your ML shares.

Since I've been retired for over a decade, and since I've not researched this transaction very deeply, Phil, please check with your own CPA to be sure that my comments are valid under current rules.

RC

Ken,

Thanks for the info re deleting the post. Didn't realize that it only deleted it from my machine. Didn't mean to cause problems. When needing to add info to a post in the future I will reply to the post. Again, thanks.

You're welcome. Glad to help.

Even when you send a cancel request through your news reader most ISPs won't honor that request. As a result it is almost impossible to delete a post once it has been sent.

Are you disagreeing with what I wrote? You said almost the same thing.

And note that even if your news server does honor the request, by the time it does so, the message has almost certainly already been propagated to many other news servers around the world. So for all practical purposes, canceling newsgroup messages is impossible.

Not disagreeing, merely clarifying what you wrote.

You said "You may think you deleted the first post, but all you really succeeded in doing was deleting it from *your* machine."

That may be interpreted as using the DELETE key to delete the message from the OPs computer (OE6 allows you to delete news messages) without sending a cancel request.

Your message said nothing about needing to send a Cancel request.