Becton Dickinson (BDX) acquired Bard (BCR) in a cash and stock deal.
This merger is a cash plus stock reorganization, which is a fully taxable merger with cash. For tax purposes this is treated as a sale of Bard for the value of the cash and stock received. Some of the proceeds from the sale (the value of the stock received) is used to purchase Becton Dickinson. All the information below was taken from information posted on the BDX web site concerning this merger.
Use the Merger with cash security transaction, to handle this merger.
Step 1. Choose Bard (BCR) as the merging company and date the transaction 12/29/2017.
Step 2. Select the option Transaction is fully taxable. Enter the following additional information:
Other fields should auto-fill from the information already entered.
Note: In Merger with cash transactions, realized capital 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.