Cause: Tim Hortons reorganized. Some shareholder will have a capital gain distribution as a result of this reorganization. Information can be found at the company we site at :
http://www.timhortons.com/us/en/about/faqs.html

Resolution: This reorganization will need to be entered with 3 Club Accounting entries. 

A return of capital entry will account for any capital gain as the program will automatically convert the return of capital into capital gain for any shares in which the return of capital is greater than the cost basis of those shares. You will need to delete the return of capital and enter the capital gain amounts separately.

Next will be a merger of old THI into new THI.

Finally, another return of capital transaction in which the amount is negative to increase the cost basis of the new THI shares.

For instructions on a normal merger entry see the instructions at:
http://www.iclub.com/support/kb/default.asp?page=normal_merger

Transaction 1 – Capital gains.

In CA3, Go to Transactions > Dividend or Distribution.

In CAO, go to Accounting > Cash Dividend.

1. Date the transaction 9/25/2009.
2. For the field type use “ Return of capital”.
3. Use the suspense account as the cash account to receive the money.
4. For the amount enter 27.99 x (#of new THI shares received) For example, enter 2799 if you received 100 new THI shares. The program will automatically convert the return of capital to a capital gain if the cost basis of the shares is less than 27.99 per share.

Look at this transaction in your transaction list. Write down the amounts listed for long-term capital gain (LTCG) and short-term capital gain (STCG).

Delete the Return of capital and capital gain transactions. These will be re-entered as separate transactions.

Once you have deleted those transactions, then you can enter the capital gains separately.
In CA3, Go to Transactions > Dividend or Distribution.

In CAO, go to Accounting > Cash Dividend.

Date the transaction 9/25/2009.
For 'Type' use “ Long-term capital gain”. For the amount, use the amount calculated by the program when you entered the return of capital transaction above. Use the suspense account as the cash account to receive the money. Repeat this process to enter any short-term capital gain amount.


Transaction 2 – The merger.

In CA3, Go to Transactions > Merger.

In CAO, go to Accounting > Securities > Record merger of securities.

• You should receive 1 share of new THI for each share of old THI.
• Date the transaction 9/26/2009.
• The old company is old THI. The new company is new THI
• Shares received is the same as shares owned of old THI.
• Price per share is 27.99.

Transaction 3 – Negative Return of capital.

In CA3, Go to Transactions > Dividend or Distribution.

In CAO, go to Accounting > Cash Dividend.

• Date the transaction 9/27/2009.
• For the field type use “ Return of capital”.
• Use the suspense account as the cash account as the source of funds.
• For the amount enter: - (LTCG + STCG) (Add the LTCG and STCG from above and enter the negative of that number.) For example, enter – 1100 if your LTCG entry was 1000 and your STCG entry was 100. The program will add this amount to the cost basis of the new THI shares.

This will also bring the suspense account to zero ( or to the balance before these transactions accounting for the THI reorganization were entered.)