How enter stock swap?

[Art]

A few years ago Nisource (NI) absorbed Columbia Gas and issued a debt
instrument called SAILS (in addition to NI stock) to Columbia
shareholders. Now Nisource has liquidated the SAILS by exchanging
them for extra shares of NI. They also paid out a small amount in
cash in lieu of a fractional share.

How do I record this swap in Q2005? Is it "Shares Removed" for the
SAILS and "Shares Added" for the new NI shares? Or some other
transaction category? None seems to fit exactly; it isn't a merger or
acquisition or a purchase and sale. Is this a tax event? How do I
categorize the few dollars cash?--it's not a dividend or proceeds of a
sale, is it?.

Art

 

[R. C. White]

Hi, Art.

I don't have time to research this today, but I typed "nisource" into by
browser's address box, hit Ctrl+Enter to have it expand that to
http://www.nisource.com/, which took me to Nisource's home page. I clicked
on Investor Relations and "followed my nose" to this page:
http://www.nisource.com/ir/images/SAILS.PDF

All that took no more than a minute or two. Have you read this?

RC

 

[Art]

Thanks, R.C. Have not checked out Nisource site, will do so now.

Art

 

[Art]

Hello again--

I checked out the NiSource site as you suggested. I found plenty of
information on the issuance and liquidation of the SAILS, including
recent letters I should have received via my brokerage but did not.
The letters offered optional methods for holders to swap or cash in
their SAILS, so I guess I missed out on those.

So far, though, NiSource is providing no tax advice on the swap.
Probably a CPA could infer tax implications from the technical and
legal descriptions of the SAILS and the remarketing process that just
took place, but it would be a chore. I hope NiSource will give
shareholders some tax information such as a 1099 before April 15,
2005.

Of course the site provides no advice on how to enter the swap in
Quicken either. The best I can do is to enter the SAILS as Shares
Removed, enter the new NI shares as Shares Added, and the few dollars
of cash as Miscellanous Income or no particular category. I'll have
to do the tax computations, if any, on the return.

Thanks again--
Art

 

[Marsha]

What you want to do is pretty straightforward. Enter into your
security list the new stock and it's info. Then go to the account
containing your current holding, and enter a transaction that is a
"Corporate Acquisition" (from the drop-down of type of transaction.
This takes care of the security swap. It should leave you with a
fractional share of the original security. The cash you received for
that is a sale of the fractional share.

 

[Art]

OK, thanks--this seems to work. It results in a Shares Removed and a
Shares Added transaction, plus I had to enter the fractional share
independently as a sale, as you implied.

Art