Johnson Controls and Tyco International completed their merger on 9/6/2016. The combined company will be named Johnson Controls, plc and will be incorporated in Ireland.
The SEC filing for this merger can be found through Johnson Controls web site at:
https://investors.johnsoncontrols.com/financial-information/johnson-sec-filings. Choose the DEFM14A filing of 7/6/2016.
If your club owned Tyco, this is a standard merger transaction.
For JCI shareholders this can be either a plain sale of your original Johnson Controls shares, -or- a sale, followed by a purchase of Johnson Controls International.
The Merger Entry for Tyco Shareholders
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.
(Remember to include fractional shares.)
For example, if you owned 100 TYC shares, you should receive .955 x 100 = 95.5 JCI shares.
Save the transaction and the merger has been entered.
For Johnson Controls Shareholders who received ONLY cash:
Enter a sale of Johnson Controls
For Clubs who received new JCI shares, this requires a sell, followed with a buy.
All the information below is from the information available from the DEFM14A filed with the SEC. The first instructions are for users of the desktop software, Club Accounting 3. Myiclub.com users will need to use the instructions for Club Accounting 3 users. This is due to the new company and the old company using the same ticker symbol. The Myiclub.com software does not allow what appears to be a merger of a company with itself.
1. Sell Transaction
The total merger consideration is $43.7453 per Johnson Controls share.
This is $5.7293 in cash and $38.016 in Johnson Controls International, plc shares (.8357 x 45.49). The opening price of Johnson Controls International, plc on the merger completion date was $45.49.
Calculate the total value received for your Johnson Controls shares by multiplying 43.7453 by the total shares of Johnson Controls owned.
Total Proceeds From the Sale = [43.7453 (# of Johnson Controls shares owned)] – (Reorganization fee).
Use the Suspense account to receive the sale proceeds.
Date this transaction 9/6/2016, or whatever date your broker used.
2. Transfer Cash Received
Transfer from the Suspense account to the Broker account (or bank if appropriate), the cash received from this merger transaction, not including any cash received in lieu of fractional shares.
The transfer amount will be $5.7293 per Johnson Controls share. If your Suspense account balance was zero when you entered the sell transaction above, then the balance after transferring the merger cash received will be the total purchase price of the Johnson Controls International, plc shares you received in this merger. For example, if you owned 100 Johnson Controls shares your cash portion of the merger consideration was $572.93. (5.7293 x 100).
3. Buy Transaction
Enter a buy transaction for the number of Johnson Controls International, plc shares entitled to receive in this merger. This will be .8357 x (# of original Johnson Controls shares owned). For example if you originally owned 100 Johnson Controls shares, then enter 83.57 Johnson Controls International, plc shares purchased (.8357 x 100).
Date the transaction 9/6/2016, or the date of the merger from your broker statement.
The total purchase price will be the amount remaining in the Suspense account, if the Suspense balance was zero when this process was started.
To double-check, the amount should be (38.016 x # of original Johnson Controls shares owned).
For example, if you originally owned 100 Johnson Controls shares, then the total purchase cost would be 3801.60.
Choose the Suspense account as the source of funds for the purchase.
Save the buy transaction.
4. Fractional Share Sale
The fractional shares received in this merger will likely be sold by your broker.
Enter a Sell transaction for the fractional shares dated 9/6/2016. The share amount will be the NON-whole part of the shares bought in the buy transaction above. For example if you owned 100 Johnson Controls shares then you entered 83.57 Johnson Controls International, plc shares purchased. You would sell .57 Johnson Controls International, plc shares in this Sell transaction.
The total proceeds will be the cash-in-lieu amount listed on your broker statement.
Note: In Merger with cash transactions, realizedcapital gains and the cost basis of the new shares have a component dependent on the price per share entered in the entry screens. In our experience brokers tend to use the price per share published by the companies on their websites in their guidance to shareholders. If the companies publish guidance with a share price, we use that share price in our instructions to minimize possible differences between the accounting records and broker information. In cases where no guidance is available, we will choose the lower of the opening or closing price on the effective date. Either of these prices is acceptable to the IRS and by choosing the lower price some realized capital gains will be deferred to a later date. However, there is always the chance the price we choose will not be the price chosen by your broker. The gain from the merger and cost basis of the new shares recorded in your accounting records will then differ from your broker information. Because of the lack of detail in the tax code, both our choice and your broker’s choice would be reasonable estimates of market value for the shares received. Your records are NOT incorrect because they differ from your broker. Tax return forms do have specific areas to report these usually small differences. Our tax printer software handles these adjustment entries automatically in the normal operation of the software.