MEMP - Merger and Split between stock & warrants?

[heidiasst]

Hi Mark,

MEMP recently came out of bankruptcy. In doing so, they have given us 14 shares of a new stock (both new name and ticker), APFY and 64 shares of AMPEZ (a warrant with zero cash value currently) for 2500 shares of MEMP we previously held.

I have no idea how to record this in FM.

Any assistance would be great.

Heidi

[Mark]

Hi Heidi,

You probably want an investment for each the new stock and warrant. You could use the spin-off wizard with MEMP being the parent. Run that twice, one for the stock and one for the warrant. This will help transfer your cost basis from MEMP to the stock/warrant.

[heidiasst]

This is a new one for me. So, I am guessing that the cost basis is identical to my original cost basis of the MEMP? But, the Market Value? This took place on May 5th, do I look back to that date? DO I even need to enter this amount?

[Mark]

Hi Heidi,

Yes, the market value would be the market value of the transferred shares, on the transfer date. You might check with your broker, or research what cost basis to use. This isn't something I can tell you, it depends on the details of the transaction.

[heidiasst]

Hey Mark,
I tried this and it did create the new investment but the old investment remains?
How do I get rid of that?

[heidiasst]

Also, How is the loss recorded? Where will that show up?

[Mark]

Hi Heidi,

What loss? Did you realize a loss? If you want to transfer cost basis to those new shares/warrants you can use the spin off wizard, and enter the amount of the transferred basis. If you want to realize a loss in the original investment, record a sell transaction. You can record a sell for $0 if you didn't actually receive any cash. This loss would show up in a Capital Gains report once you record the sell transaction. You can "hide" the investment once you've sold it if you don't want to see it listed anymore. For a tutorial on hiding investments, see:

https://youtu.be/2bb7hSew_8g

[heidiasst]

Example, we held 1,000 shares of MEMP @ $16.66 per share = $16,660.00
They merged with Amplify Energy, we now hold 5 shares of APFY, 25 warrants and received cash in lieu of in the amount of $14.93

How do I record this?

[Mark]

Hi heidiasst,

I think you need some more details. What was the cash in lieu of? How much of the cost basis moved to each APFY and the warrants? Did you still own any shares of MEMP?

[heidiasst]

Please see the attachment, I believe this will answer the questions

We no longer own shares of MEMP

Heidi

[Mark]

Hi Heidi,

That statement doesn't really show how to deal with tax basis, how you got cash in lieu, etc. I can't tell you what happened, but if you know the details of what you want to record, and how, I can help with the specifics of how to record what happened. You might call your broker, or research it online to better understand the specifics here.