|
Posted by Phil Schuman on May 19, 2006, 8:05 am
Please log in for more thread options
Just downloaded transactions
and now have the spinoff from Sprint called - Embarq -
How should I account for the cost basis of a spinoff ?
Since it just appears as Shares Added with a $0 cost basis,
do I just leave that, or should I modify that $0 cost basis
according to some ratio ?
What about the issuing Sprint stock ?
|
|
Posted by R. C. White on May 19, 2006, 8:37 am
Please log in for more thread options
Hi, Phil.
I'm not familiar with the Sprint spinoff, but the rules for spinoffs
generally are well-known - and discussed here often.
The total basis (normally the cost) of your Sprint investment hasn't
changed, but now it is split between your old Sprint share and your new
Embarq shares. The tax code says to allocate the original basis among the
old and new shares based on the fair market values of the shares immediately
after the spinoff.
You didn't say which Quicken version you are using. Older Quickens had
"Easy Actions"; the new versions use a drop-down list when we click Enter
Transactions. Use the one labeled "Corporate Securities Spin-Off". The
only tricky part is Quicken's terminology. The form asks for "Cost" of the
old and new shares. It should ask for the FMV immediately after the
spinoff. Once Quicken knows these values, it can properly allocate the
original basis among the old and new shares.
As a test, after entering the spinoff transaction, make sure that your total
basis of the old and new shares equals your original basis in Sprint. This
doesn't prove that it's right - because you could get that answer by
allocating zero to Embarq and leaving Sprint unchanged - but if the total is
not right, then something is wrong.
I don't download transactions. The few times I've tried, I've spent more
time tweaking the results to suit me than I've saved by downloading. So I
can't speak to that aspect of your situation.
RC
--
R. C. White, CPA
(Retired - no longer licensed to practice)
San Marcos, TX
rc@grandecom.net
> Just downloaded transactions
> and now have the spinoff from Sprint called - Embarq -
>
> How should I account for the cost basis of a spinoff ?
>
> Since it just appears as Shares Added with a $0 cost basis,
> do I just leave that, or should I modify that $0 cost basis
> according to some ratio ?
>
> What about the issuing Sprint stock ?
|
|
Posted by R. C. White on May 19, 2006, 8:58 am
Please log in for more thread options Hi, again, Phil.
I should have added that each Sprint shareholder should not have to
determine the FMVs for himself. Within a few days after the spinoff, Sprint
should publish their version of these values. They might even publish a
worked-out worksheet showing how to allocate your basis. Go to the Sprint
website and look for a page called Investor Relations, or something similar.
RC
--
R. C. White, CPA
(Retired - no longer licensed to practice)
San Marcos, TX
rc@grandecom.net
> Just downloaded transactions
> and now have the spinoff from Sprint called - Embarq -
>
> How should I account for the cost basis of a spinoff ?
>
> Since it just appears as Shares Added with a $0 cost basis,
> do I just leave that, or should I modify that $0 cost basis
> according to some ratio ?
>
> What about the issuing Sprint stock ?
|
|
Posted by Phil Schuman on May 19, 2006, 12:16 pm
Please log in for more thread options
> Hi, again, Phil.
>
> I should have added that each Sprint shareholder should not have to
> determine the FMVs for himself. Within a few days after the spinoff,
Sprint
> should publish their version of these values. They might even publish
a
> worked-out worksheet showing how to allocate your basis. Go to the
Sprint
> website and look for a page called Investor Relations, or something
similar.
>
> RC
>
thanks - yeah, I had found some web examples of how in general to handle
spin-off
transactions. I even have to update my brokerage account the same way
manually.
Taking the total original cost basis and re-distributing it between the
2 entities.
BTW - for this new Embarq - http://www.embarq.com - indicates the taxing
info
will be in a letter sent around June 2006.
|
| Similar Threads | Posted | | Odd cost basis--how to fix it? | October 20, 2006, 9:22 pm |
| Re: Adjusting cost basis | June 30, 2006, 7:55 pm |
| Re: Adjusting cost basis | July 1, 2006, 1:31 pm |
| help regarding security Cost basis | November 14, 2007, 7:25 pm |
| Adjusting cost basis | June 29, 2006, 6:23 pm |
| Q05 Premier - Update Cost Basis | August 10, 2006, 8:09 pm |
| Cost basis for income reinvested | February 18, 2007, 11:01 pm |
| Does Q07 improve handling cost basis vs 06 for splits etc | November 21, 2006, 8:02 pm |
| Stock Dividends increase cost basis? | December 15, 2006, 5:05 pm |
| Q2006 Cap Gain distribution adds to cost basis? | September 13, 2006, 12:59 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap