ONEOK, Inc completed its merger with Magellan Midstream Partners on 9/25/2023 for cash and OKE stock. Magellan Midstream Partners shareholders were to receive $25.00 in cash plus 0.667 OKE share for each MMP share. The transaction is a taxable event. For tax purposes this is treated as a sale of MMP followed by a purchase of OKE from some of the proceeds of the sale. Gain or loss will be realized based on the total value of the cash and stock received and the cost basis of the MMP shares. The SEC filing for this merger can be found on the EDGAR site at
https://www.sec.gov/Archives/edgar/data/1039684/000121390023055912/fs42023a1_oneokinc.htm
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 chosen 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. 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.
Resolution: For Magellan Midstream Partners shareholders this merger is a cash-plus-stock reorganization. Information for these instructions is from SEC filings, company websites, and websites offering historical stock prices.
Use the Merger with cash transaction.
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