How to handle company acqusition

[sponge]

Hi
I have 100 shares of company A which are being tracked in FM. This company was bought by company B. Here is how the transaction for 100 shares of company A got broken up:
For 40 shares: got 1.7x shares of company B for total of 68 shares of company B
For 60 shares: got $5 cash per share for total of $300

What is the best way to record this transaction? How do you set the cost basis for shares of company B?
thanks

[Mark]

Hi sponge,

So, overall you went from 100 shares of company A to 68 shares of company B and $300 in cash. You can record this like this:

- Split transaction with a ratio of 68 for 100
- Distributed distribution of $300
- Change the name/symbol/CUSIP properties

This will maintain your tax basis/history in the same investment. The tax cost basis would not change if you record it like this. If the tax basis should be lowered by $300, then mark the distribution as a "Return of Capital" type.