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Posted by R. C. White on January 9, 2007, 6:12 pm
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> Your original basis for 362 shares of DUK would no be spread over the same
Make that:
Your original basis for 362 shares of DUK would now be spread over the same
RC
> Hi, Phil.
>
> Thanks for those details.
>
> Now we know this is the Duke/Spectra spin-off that we discussed at some
> length last week. See the thread starting with Nemo's post on 1/4/07,
> Subject: Spectra spin-off/
>
> As John Pollard pointed out, Quicken treats a spin-off as a Return of
> Capital, plus purchase of the new securities. As a broker, you know this
> is NOT correct, but that is the way Q handles it. (John and I had a
> spirited discussion of this a year or two ago, as I recall. As usual, he
> was right.)
>
> John is also right about the difficulty of reversing the multiple wrong
> entries and entering the proper ones. Since the transaction happened so
> recently, your best bet might be to restore your latest backup before you
> posted the transaction and enter it correctly. (Quicken's latest
> automatic backup in your QuickenWBACKUP folder should be less than a
> week old.) This means also entering all your other recent activity, too,
> of course. Depending on how complex your Quicken file is, you might want
> to use a QIF file to export from that backup only the Account that holds
> your Duke shares, then reload your up-to-date QDF file, delete that
> Account, import the QIF file, then make the correct spin-off entry.
> Neither is a perfect solution, but either should work, with some effort.
>
> <Copy'n'paste from Nemo's thread:>
> I would enter this in the Quicken Corporate
> Securities Spin-off window (Q2007 version):
>
> Transaction Date: 1/2/2007
> Security Name: DUK
> New Company: SE
> New shares issued: .5 per old share
> Cost [actually FMV] per old share: $19.25 [post spin-off]
> Cost [actually FMV] per new share: $27.75
> (Leave the "taxable spinoff" box unchecked)
>
> Your original basis for 362 shares of DUK would no be spread over the same
> (but deflated) 362 shares of DUK plus 181 shares of SE. Note that your
> basis does not actually get entered here; Quicken handles the allocation
> "behind the scenes" for each lot of DUK that you owned.
>
> You said:
>> $20 opening price of old shares (post spin-off)
>> $28.25 cost per new share
>
> These numbers differ from those on Duke's website:
> TAX INFORMATION FOR SPECTRA ENERGY SPIN-OFF
> http://www.duke-energy.com/investors/spectra/spectra%20tax%20info.pdf
>
> They used $19.25 and $27.75. Since Fair Market Value is a matter of
> opinion, of course, your numbers may be just as good as theirs, or better.
> It won't matter until you sell some of the shares, anyhow, and for 362
> shares, the difference shouldn't be enough for you and the IRS to argue
> about. (I get 58.61% for DUK using your numbers; they got 58.11%.)
>
>> Also I think I understand what happens in the real world when a
>> Corporate Securities Spin-off is effective since I spent over 30 years in
>> the brokerage business. My problem is understanding what Quicken does.
>
> Sorry if I seemed to be talking down to you. When our only clue is your
> first name, we don't know who we are talking to, so we often have to
> address the "lowest common denominator". And I agree that figuring out
> Quicken is often harder than using pencil and paper.
>
> RC
> --
> R. C. White, CPA
> San Marcos, TX
> (Retired. No longer licensed to practice public accounting.)
> rc@grandecom.net
> Microsoft Windows MVP
> (Currently running Vista Ultimate x64)
>
>> RC,
>>
>> Using Win Xp SP 2 with all updates
>> Quicken Deluxe 2006 with all updates
>> Spin-off was effective Jan 2, 2007 but since the market was closed
>> (Pres.Ford funeral) it went into effect on Jan 3rd.
>>
>> Corporate Securities spin-off entry made
>> Duke Energy (Original security)
>> Spectra Energy (Spin Off Security)
>> .5 shares issued per old share
>> $20 opening price of old shares (post spin-off)
>> $28.25 cost per new share
>>
>>
>> Held 362 shares of Duke Energy
>>
>> Don't understand how you can say I am trying to get maximum help with
>> minimal disclosure since all I asked in my first post was:
>> "Can I reverse a Corporate Securities Spin-off? If so, How?"
>>
>> Also I think I understand what happens in the real world when a
>> Corporate Securities Spin-off is effective since I spent over 30 years in
>> the brokerage business. My problem is understanding what Quicken does.
>>
>> Hope this helps.
>>
>> Phil B.
>>
>>
>>> Hi, Phil.
>>>
>>> Please tell us the version of Quicken that you are using. It wouldn't
>>> hurt to also mention your version of Windows.
>>>
>>> And then tell us when the spin-off happened and when you made the entry.
>>> What entry did you make? The name of the companies involved would
>>> probably also be helpful. Some of us may already be familiar with the
>>> transaction; if not, we can look it up. A link to the company's website
>>> would probably go a long way to help us understand and to help you
>>> understand it, too. The number of shares might be important.
>>>
>>> You are giving me the very queasy feeling of having come into the middle
>>> of the movie, with no idea of how we got to this point. :>( It seems
>>> that you are trying to get maximum help with minimal disclosure. We
>>> can't help you if we don't really know what the problem is, and you have
>>> not done a good job of explaining it in your first two messages. My
>>> first reply asked for details, but your second post gave us none at all.
>>> We don't even know if this is a public company or your family
>>> corporation. We don't know if the spin-of happened in 2006 or 1996.
>>>
>>> Remember the two-step process for recording any transaction:
>>>
>>> Step 1: Understand what happened in the real world.
>>>
>>> Step 2: Record what happened.
>>>
>>> Trying to do the second step before the first is almost guaranteed to
>>> require that you back up, undo what you did wrong, and start over.
>>>
>>> RC
>>>
>>>> RC,
>>>>
>>>> Seems that the spin-off entry has fouled up the value of the
>>>> original security as well as the spin-off security. I must have done
>>>> something wrong. Prices are correct.
>>>>
>>>> For some reason I can't find the spin-off transaction. Any help
>>>> appreciated. Thanks.
>>>>
>>>> Phil B.
>>>>
>>>>
>>>>> Hi, Phil.
>>>>>
>>>>> What???
>>>>>
>>>>> That seems a very strange questions. Exactly what do you mean?
>>>>>
>>>>> Would it work to simply delete the entry for the spin-off transaction?
>>>>> Or is your situation more involved than that?
>>>>>
>>>>> Please post back with details and maybe we can suggest something more
>>>>> elaborate that might work for you.
>>>>>
>>>>> RC
>>>>>
>>>>>> Can I reverse a Corporate Securities Spin-off? If so, How?
>>>>>>
>>>>>> Any help appreciated.
>>>>>>
>>>>>> Phil B.
>
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