Recording Corporate Events

Corporate events like mergers, spinoffs, and stock splits change your holdings without you actively trading. This guide covers how to record each type in Capitally.

Stock Split

What happens: The company changes the number of outstanding shares. In a forward split, you receive more shares at a proportionally lower price. In a reverse split, shares are consolidated.

Capitally automatically adds split transactions for all assets with market-provided pricing, and it is important to use these automatic transactions because they need to stay in sync with the market price. Market prices in Capitally are unadjusted for splits, so automatic splits ensure your position quantities match the current price data correctly.

How to record: Use the Split transaction type.

• Set the Numerator and Denominator to match the split ratio
• For a 4:1 forward split: Numerator = 4, Denominator = 1
• For a 1:10 reverse split: Numerator = 1, Denominator = 10

If the split produces fractional shares that are cashed out, add a separate Sell transaction for the fractional portion at the price you received.

Tax-Free Merger (Stock-for-Stock)

What happens: Your shares in the acquired company are exchanged for shares in the acquiring company at a fixed ratio. No taxable event occurs — your cost basis and holding period carry over.

How to record: Use the Convert transaction type.

• Set the Asset to the acquired company
• Set the Quantity to your full share count being converted
• Set the Target Asset to the acquiring company
• Set the Target Quantity to the shares you receive
• Leave the Price field empty — this tells Capitally to carry over your cost basis without recognizing any gain or loss

Fractional shares: If the merger produces fractional shares that are cashed out, you have two options:

• Enter the full whole shares you received as the Target Quantity and put the cash from fractional shares in the Residual Cash field (expand "Show more" to access it), or
• Add a separate Sell transaction on the acquiring company for the fractional shares at the cash-in-lieu price

Cash Merger / Tender Offer

What happens: All your shares are bought for cash at a fixed price. This is a fully taxable event.

How to record: Use a standard Sell transaction at the tender or acquisition price per share. No special handling needed — this is just like a regular sale.

Mixed Merger (Stock + Cash)

What happens: You receive new shares in the acquiring company plus a cash payment. Gain is typically recognized up to the amount of cash received.

How to record: Use a Convert transaction:

• Set the Quantity to all shares of the acquired company
• Set the Target Asset and Target Quantity to the shares received
• Set the Price field to encode the recognized gain: calculate it as (original cost basis + recognized gain) / quantity
• Expand "Show more" and enter the cash received in the Residual Cash field

The Price field on the Convert determines how much gain Capitally recognizes on the conversion.

Tax-Free Spinoff

What happens: A parent company distributes shares of a subsidiary to existing shareholders. Your cost basis in the parent is split between the parent and the new company based on an allocation ratio (usually published in the company's announcement).

How to record: Use the Convert transaction type with source quantity set to zero.

• Set the Asset to the parent company
• Set the Quantity to 0 — this tells Capitally this is a spinoff, not a regular conversion
• Set the Target Asset to the new subsidiary
• Set the Target Quantity to the shares you received
• Leave the Price field empty — this keeps the cost basis based on what you actually paid for the parent stock, allocating it proportionally to the new position

Residual cash: If you received cash instead of fractional shares, expand the "Show more" section and enter the amount in the Residual Cash field. This amount is added to the cost basis reduction on the parent position.

What Capitally does automatically:

• Reduces the parent company's cost basis proportionally across all lots
• Opens a new position in the subsidiary with the allocated cost basis
• Links the two sides as "Spinoff From" and "Spinoff To"

Taxable Spinoff

What happens: Similar to a tax-free spinoff, but the fair market value of the received shares is taxable as dividend income. The parent's cost basis remains unchanged.

How to record: Use two separate transactions:

1. A Dividend on the parent company for the taxable income amount (the FMV of received shares)
2. A Buy of the new subsidiary shares at the fair market value per share

Return of Capital Distribution

What happens: A distribution from a company that returns your invested capital rather than paying out earnings. This is not taxable income — instead, it reduces your cost basis. Common with REITs, MLPs, income trusts, and ETFs that distribute more than their earnings.

How to record: Use a Dividend transaction.

1. Expand "Show more (return of capital and income in shares)"
2. Enter the Return of Capital amount in the Return of Capital field

If the distribution is entirely Return of Capital, you can leave the dividend Value field empty and only fill in the Return of Capital amount. If the distribution includes both regular dividend income and a Return of Capital portion, enter the total distribution in the Value field and the RoC portion in the Return of Capital field.

What Capitally does:

• The Return of Capital portion reduces your cost basis proportionally across all lots
• The remaining portion (Value minus Return of Capital) is treated as regular dividend income
• If the Return of Capital exceeds your total cost basis, the excess is treated as income (since your basis cannot go below zero)

For more details, see Tracking Dividends.

Liquidation

What happens: A company winds down and distributes its remaining assets to shareholders over time. Each distribution recovers your cost basis first; once the basis is fully recovered, further distributions become capital gains.

How to record: Record each distribution as a Dividend with a Return of Capital amount:

1. For each liquidating distribution, create a Dividend transaction with the full amount entered as Return of Capital
2. Capitally automatically tracks your remaining cost basis and treats any excess as income
3. When the company is fully liquidated, record a Sell of your remaining shares at the final distribution price (or $0 if shares are cancelled with no further payment)

Rights Offering

What happens: The company gives existing shareholders the right to purchase additional shares at a discounted price.

How to record:

• If exercised: Use a Buy transaction at the subscription price
• If sold: Track the rights as a separate asset. Record a Transfer In when you receive them, then Sell when you sell the rights
• If expired: No transaction needed. If you tracked them as an asset, record a Transfer Out to remove them from your portfolio

Preferred-to-Common Conversion

What happens: Preferred shares are converted to common shares at a conversion ratio. Usually not a taxable event.

How to record: Use the Convert transaction type with the Price field left empty, so the cost basis carries over to the new common shares.

Name or Ticker Change

What happens: The company changes its name or trading symbol but nothing else changes about your position.

How to record: No transaction is needed. Simply edit the asset details (name, ticker symbol) in Capitally. Since Capitally tracks assets by internal ID, not by ticker, your history remains intact. If the market data source changes (different exchange symbol), update the asset's data source configuration as well.