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Corporate spin off in Q2006 gbottolfsen 04-03-2007
Posted by gbottolfsen on April 3, 2007, 8:51 am
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 Hello

Why do Quicken software "Engineers" make a simple thing, so damm
hard????

I am trying to do a corporate spin off of Kraft from Philip Morris [MO],
the spin off option in the drop down menu under action for a new
transaction [Q2006] does not work correctly [the number of shares and
price are not correct]

Maybe I am entering the wrong information? What numbers are they asking
for in the boxes under the "spin off" action?

What I ended up doing is creating a "buy shares" option under action,
this makes the numbers come out correct.

Thanks everyone
GB





Posted by MedRxman on April 3, 2007, 9:21 am
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 Record a corporate acquisition (stock-for-stock)
1.. In the Account Bar list, select the account you want to use.
Quicken opens the account. If the transaction list is not displayed, click
the Transactions tab at the top of the account window.
2.. Click Enter Transactions.
3.. In the Enter Transaction list, select Corporate Acquisition (stock for
stock).
4.. Use this dialog to change the security name and price information when
a corporation acquires another corporation or entity you currently own and
track in Quicken. Click a link below if you need additional information.
Company acquired
Select the name of the security as it is currently identified in your
Quicken transaction list.

Acquiring company
Enter the name of the parent company that is buying the other.

New shares issued
Enter the number of new shares of the parent company that are being issued
for every share of the acquired company.

Price per share for acquiring company
Enter the share price of the parent company after the acquisition.

Memo
For example, "Corporate stock-for-stock acquisition on (date)."
5.. Click Enter/New to enter another transaction, or Enter/Done to finish.
Quicken enters this transaction in your investment account transaction
list.
> Hello
>
> Why do Quicken software "Engineers" make a simple thing, so damm
> hard????
>
> I am trying to do a corporate spin off of Kraft from Philip Morris [MO],
> the spin off option in the drop down menu under action for a new
> transaction [Q2006] does not work correctly [the number of shares and
> price are not correct]
>
> Maybe I am entering the wrong information? What numbers are they asking
> for in the boxes under the "spin off" action?
>
> What I ended up doing is creating a "buy shares" option under action,
> this makes the numbers come out correct.
>
> Thanks everyone
> GB
>
>
>
>



Posted by gbottolfsen on April 3, 2007, 11:01 am
Please log in for more thread options
MedRxman:
Thanks for your quick reply.
I went through all the steps you suggested, the numbers were still
incorrect.
This was not one company acquiring another.
It was one company divesting [selling,"spin off"] one part of it's
holdings into a totally different co. RE: Altreia, spun off Kraft.
What am I missing, or do not understand?
GB



> Record a corporate acquisition (stock-for-stock)
> 1.. In the Account Bar list, select the account you want to use.
> Quicken opens the account. If the transaction list is not displayed,
click
> the Transactions tab at the top of the account window.
> 2.. Click Enter Transactions.
> 3.. In the Enter Transaction list, select Corporate Acquisition
(stock for
> stock).
> 4.. Use this dialog to change the security name and price
information when
> a corporation acquires another corporation or entity you currently own
and
> track in Quicken. Click a link below if you need additional
information.
> Company acquired
> Select the name of the security as it is currently identified in
your
> Quicken transaction list.
>
> Acquiring company
> Enter the name of the parent company that is buying the other.
>
> New shares issued
> Enter the number of new shares of the parent company that are being
issued
> for every share of the acquired company.
>
> Price per share for acquiring company
> Enter the share price of the parent company after the acquisition.
>
> Memo
> For example, "Corporate stock-for-stock acquisition on (date)."
> 5.. Click Enter/New to enter another transaction, or Enter/Done to
finish.
> Quicken enters this transaction in your investment account
transaction
> list.
> > Hello
> >
> > Why do Quicken software "Engineers" make a simple thing, so damm
> > hard????
> >
> > I am trying to do a corporate spin off of Kraft from Philip Morris
[MO],
> > the spin off option in the drop down menu under action for a new
> > transaction [Q2006] does not work correctly [the number of shares
and
> > price are not correct]
> >
> > Maybe I am entering the wrong information? What numbers are they
asking
> > for in the boxes under the "spin off" action?
> >
> > What I ended up doing is creating a "buy shares" option under
action,
> > this makes the numbers come out correct.
> >
> > Thanks everyone
> > GB
> >
> >
> >
> >
>
>


Posted by MedRxman on April 3, 2007, 11:28 am
Please log in for more thread options
My Error: This should work:

Record a corporate spin-off of new securities
1.. In the Account Bar list, select the account you want to use.
Quicken opens the account. If the transaction list is not displayed, click
the Transactions tab at the top of the account window.
2.. Click Enter Transactions.
3.. In the Enter Transaction list, select Corporate Securities Spin-off.
4.. Use this dialog to change the security name and price information when
a corporation spins off another corporation or entity. Click a link below if
you need additional information.
Security Name
Enter the name of the security as it is currently identified in your
Quicken transaction list.

New Company
Enter the name of the new corporation or entity that will receive the
spin-off shares.

New shares issued
Enter the number of new shares the corporation is issuing for each old
share.
This information should be available from the parent company or from news
articles on the day of the spin-off.

Cost per old share
Enter the closing price per share of your original security, on the date
of the spin-off.

Cost per new share
Enter the cost per share of the new security (the one that was spun off),
on the date of the spin-off.

Taxable spin-off
If this is a taxable spin-off, select the check box.

The parent company determines whether this is a taxable or nontaxable
spin-off.
a.. If this is a taxable spin-off, Quicken enters one Return of Capital
transaction from the parent company and one Buy transaction for the spin-off
company, recorded on the day of the spin-off.
b.. If this is a nontaxable spin-off, Quicken enters a pair of
transactions for each open lot of the parent company-a Return of Capital
transaction from the parent company and a Buy transaction for the spin-off
company, recorded with the same date as the open lot.
> MedRxman:
> Thanks for your quick reply.
> I went through all the steps you suggested, the numbers were still
> incorrect.
> This was not one company acquiring another.
> It was one company divesting [selling,"spin off"] one part of it's
> holdings into a totally different co. RE: Altreia, spun off Kraft.
> What am I missing, or do not understand?
> GB
>
>
>
>> Record a corporate acquisition (stock-for-stock)
>> 1.. In the Account Bar list, select the account you want to use.
>> Quicken opens the account. If the transaction list is not displayed,
> click
>> the Transactions tab at the top of the account window.
>> 2.. Click Enter Transactions.
>> 3.. In the Enter Transaction list, select Corporate Acquisition
> (stock for
>> stock).
>> 4.. Use this dialog to change the security name and price
> information when
>> a corporation acquires another corporation or entity you currently own
> and
>> track in Quicken. Click a link below if you need additional
> information.
>> Company acquired
>> Select the name of the security as it is currently identified in
> your
>> Quicken transaction list.
>>
>> Acquiring company
>> Enter the name of the parent company that is buying the other.
>>
>> New shares issued
>> Enter the number of new shares of the parent company that are being
> issued
>> for every share of the acquired company.
>>
>> Price per share for acquiring company
>> Enter the share price of the parent company after the acquisition.
>>
>> Memo
>> For example, "Corporate stock-for-stock acquisition on (date)."
>> 5.. Click Enter/New to enter another transaction, or Enter/Done to
> finish.
>> Quicken enters this transaction in your investment account
> transaction
>> list.
>> > Hello
>> >
>> > Why do Quicken software "Engineers" make a simple thing, so damm
>> > hard????
>> >
>> > I am trying to do a corporate spin off of Kraft from Philip Morris
> [MO],
>> > the spin off option in the drop down menu under action for a new
>> > transaction [Q2006] does not work correctly [the number of shares
> and
>> > price are not correct]
>> >
>> > Maybe I am entering the wrong information? What numbers are they
> asking
>> > for in the boxes under the "spin off" action?
>> >
>> > What I ended up doing is creating a "buy shares" option under
> action,
>> > this makes the numbers come out correct.
>> >
>> > Thanks everyone
>> > GB
>> >
>> >
>> >
>> >
>>
>>
>



Posted by R. C. White on April 3, 2007, 2:56 pm
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Hi, GB.

Step 1, of course, is to understand what happened in the real world. News
reports usually tell us, but often leave out some important details. The
best place to get the information is usually from the parent company.
Nowadays, we can just go to their website and click on something like
Investor Relations.

In this case, the parent is NOT Philip Morris, but PM's parent, Altria. A
little searching found:
Kraft Spin-Off Investor Information
http://www.altria.com/investors/02_20_00_spinoffinvinfo.asp

The link there took me to the page we really want:
Kraft Spin-Off Investor Information
http://kraft.com/investors/kraft_spin_off.html

But the spin-off did not happen in 2006. To quote:: "The distribution of
Kraft's outstanding shares owned by Altria was made on March 30, 2007, to
Altria shareholders of record as of 5:00 p.m. Eastern Time on March 16,
2007." Then the Kraft page refers us back to the Altria page for details,
where we see, "Altria will distribute 0.692024 of a share of Kraft for every
share of Altria common stock outstanding as of the Record Date,..."

Step 2 is to record what actually happened in Step 1.

In Quicken 2007, click Enter Transaction and choose Corporate Securities
Spin-Off. The transaction date is 3/30/07. Security name is Altria Group,
Inc.. The new company is Kraft, Inc. New shares issued is 0.692024 (of
Kraft) per old share (of Altria). And leave blank the "taxable spinoff"
box; Altria says it qualifies as tax-free. You may want to make some
notations in the Memo box.

But that is as far as we can go until we get two more bits of information:
the Fair Market Values of Altria and Kraft immediately AFTER the spin-off.
Quicken asks for the "Cost" of the old and new shares, but that is not
correct. When we know the FMVs of the shares, Quicken can then calculate
the new bases (cost) of the old and new shares, based on the ratio of those
values, applied to your adjusted basis in Altria. Quicken will adjust the
basis for all the lots of Altria that you owned, and will record the basis
of matching lots of Kraft, and will show the acquisition dates for each lot
as of the dates you acquired the matching lots of Altria. (This will have
the unfortunate effect of showing that you owned Kraft shares before
3/30/07, which is wrong, of course; we haven't figured out a good way to fix
this, and neither has Intuit, apparently.)

The actual spin-off date was just a couple of days ago. Within a very few
days, Altria should determine and publish their opinion as to the FMVs of
Altria and Kraft for shareholders to use in the calculation. (FMV is a
matter of opinion and you are free to argue for different numbers, but it
rarely is worth the trouble.)

You probably will be entitled to a fractional share of Kraft and will
receive cash in lieu of that fraction. Immediately after recording the
spin-off, you should record the sale of this fraction for the amount of the
check you will receive. Use the per-share basis that Quicken has just
calculated and your Altria acquisition date; Quicken should handle this for
you automatically.

For further information, watch the Altria and Kraft web pages.

I've been retired for over a dozen years and tax rules change daily, GB. Be
sure to check with your own CPA to be sure that my understanding is still
correct.

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)

> Hello
>
> Why do Quicken software "Engineers" make a simple thing, so damm
> hard????
>
> I am trying to do a corporate spin off of Kraft from Philip Morris [MO],
> the spin off option in the drop down menu under action for a new
> transaction [Q2006] does not work correctly [the number of shares and
> price are not correct]
>
> Maybe I am entering the wrong information? What numbers are they asking
> for in the boxes under the "spin off" action?
>
> What I ended up doing is creating a "buy shares" option under action,
> this makes the numbers come out correct.
>
> Thanks everyone
> GB


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