Burger King (BKW) Tim Horton's merge to form Restaurant Brands International (QSR) - steps for Burger King Shareholders.

NOTE: These steps are for clubs that held Burger King shares prior to the merger. If your club held Tim Horton's shares prior to the merger, please see FAQ 1394 on entering this merger for Tim Horton's shareholders.

Burger King and Tim Horton’s completed their merger to form Restaurant Brand International on 12/12/2014. The SEC filing (425 filing of 11/5/2014) for this merger was found in the Investor Relations area of the Tim Horton’s web site.

Be aware that some uncertainty is involved in this merger. The companies make it clear the IRS may not agree with the company interpretation of the tax code as it relates to this merger. The IRS may make a ruling at some point in the future that will alter the tax and cost basis consequences of this merger for Burger King shareholders.

Burger King Shareholder Resolution:

This merger changed the country of incorporation of Burger King. Such mergers are usually fully taxable. The merger was structured to mitigate some of the tax consequences. In addition, the default option gave the shareholder an interest in Restaurant Brands International as well as partnership units in a limited partnership. Shareholders also were given the option to receive only partnership units. Each option requires different transactions to properly enter this merger into the software and will be covered separately. All the information below is based on the information available from the 425 filed with the SEC.

1. The Mixed Option

This was the default option. Shareholders received .99 shares of QSR and .01 units of RSTRF for each Burger King share. This will be accomplished by entering a spinoff of the limited partnership units first then the merger of Burger King into QSR. The merger may involve a capital gain. Accounting for the gain will be included in the instructions for the merger.

A. The Spinoff Entry

Here is the information needed to enter the spinoff of the partnership units from Burger King to Restaurant Brands, LP.

Date: 12/12/2014

Select Parent Security (or Parent Company) : Burger King Worldwide (BKW)

Remaining Basis Percentage: 98.93

Cash received: See your broker statement for cash-in-lieu received

Spinoff Security (or Symbol of New Company) : Restaurant Brands, Int., LP (RSTRF)

Shares received : .01 x (#of BKW shares owned) (Remember to include fractional shares.)

For example, if you owned 150 BKW shares, you should receive .01 x 150 = 1.5 RSTRF shares.

Price Per Share : 38.08 (Opening price on first NYSE trading day, 12/19/14.)

This LP was traded in Toronto on 12/12/14. If you want a 12/12/14 price find the price for QSR.UN and convert C$ to US$ as QSR.UN is traded in Canadian dollars.

Save the transaction and the spinoff has been entered.

B. The Merger Portion

Before entering the merger a calculation to determine any gain on this transaction needs to be completed. The merger consideration is the market value of .99 shares of QSR received for each BKW share. Based on the opening price of QSR on the effective date this is equivalent to US $35.0559 per BKW share. To calculate the gain, each block must be treated separately as losses cannot be realized, only gain. Using the following formula, calculate the gain from each block then sum the gain from each block with a gain. Do not include blocks with a loss in the sum of the total gain. Keep short-term and long-term gains separate.

Gain from a block = 35.0559 x (# of shares in block) – cost basis of block

Total reportable gain = Sum of gains from each block with a gain. (Ignore loss blocks.)

Cost basis information for individual blocks, adjusted for splits and the spinoff entered as part of this merger, can be found by entering a mock sale for fewer shares than your total holdings. This process gives a block selection screen with the current cost basis information for each block currently held. Record this information to use to calculate any gain from this merger. Be sure to record holding period also. Short-term and long-term gains should be calculated and entered separately.

Once the total gain has been calculated enter a Cash Distribution transaction choosing the appropriate capital gain in the “type” field. If you calculations show both short-term and long-term gains, enter each separately. The company making the distribution would be Burger King Worldwide.

After entering the capital gain distributions, if necessary, the actual merger transaction can be entered.

The Merger Entry

Go to Transactions > Merger or Accounting > Securities > Record merger of securities depending on the version of the software being used. If you are unfamiliar with merger transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_merger

Here is the information you need to complete the merger.

Date: 12/12/2014

Old Security or Merging Company: Burger King Worldwide (BKW)

Price per share of old Security / BKW: Use last valuation price

Cash received: See your broker statement for cash-in-lieu

New Security: Restaurant Brands International (QSR)

Shares received : .99 x (#of BKW shares owned)

(Remember to include fractional shares.)

For example, if you owned 150 SBKW shares, you should receive .99 x 150 = 148.5 QSR shares.

Save the transaction and the merger has been entered. You are not quite done yet.

Return of Capital Entry

The cost basis of the QSR shares received is increased above the cost basis of the BKW shares exchanged by the amount of the gain realized. This is accomplished by entering a Cash Distribution transaction of “type” Return of Capital from QSR for an amount equal to the negative of the total capital gain distributions from BKW attributed to this merger. There is no need to enter separate Return of Capital transactions for the long-term and short-term gains. A single entry for the negative of the sum of the gains will suffice. Be sure the company selected is Restaurant Brands, International and the amount has a negative sign. This will reduce the balance from the “cash” received by the capital gain entries and add the amount to the cost basis of QSR. Date this transaction 12/13/2014.

2. The All Partnership Unit Option

If shareholders chose this option they would receive 1 unit in Restaurant Brands International, LP. for each BKW share owned. They may also need to realize gain based on the value of the voting rights received as part of this merger. It is the assertion of the companies in their SEC filing that this value is nominal. In such case, no gain would be realized. Please be aware the IRS may rule against the company interpretation of the tax code and adjustments to this merger entry may be required in the future. For now, we’ll proceed with the company interpretation.

Here is the information you need to complete the merger.

Date: 12/12/2014

Old Security or Merging Company: Burger King Worldwide (BKW)

Price per share of old Security / BKW: Use last valuation price

Cash received: See your broker statement for cash-in-lieu

New Security: Restaurant Brands International, LP (RSTRF)

Shares received : 1.0 x (#of BKW shares owned)

(Remember to include fractional shares. This would be rare in this transaction)

For example, if you owned 150 SBKW shares, you should receive 1.0 x 150 = 150 RSTRF shares.

Price per share of New Security: 38.08 (Opening price on first NYSE trading day, 12/19/14.)

This LP was traded in Toronto on 12/12/14. If you want a 12/12/14 price find the price for QSR.UN and convert C$ to US$ as QSR.UN is traded in Canadian dollars.

This entry does not affect tax or cost basis. It is used as the starting point for the return calculations on the Valuation Statement.

Save the transaction and the merger has been entered.

Important Notices:

Accounting for partnerships currently is not directly supported by our accounting software. It will require a bit more work for treasurers.

As noted earlier, the IRS may rule against the company interpretation of the tax code. The most likely result would be to make this a fully taxable transaction. In that case, the merger would be treated as a sale of BKW for the value of the partnership units received. This would be followed by a buy of the units received for the exact same amount.