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Subject Author Date
Multiple Corporate Spinoffs (Cendant) Walt Bilofsky 08-02-2006
Posted by Walt Bilofsky on August 10, 2006, 2:26 pm
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 RC's method, without any modifications, is fine for the purpose of
recording capital gains, display of current holdings, etc.

The only problem is that the past account holdings, values, etc. will
be off because the spun-off stocks will appear before you actually got
them. This won't bother most people, I daresay.

I suggest you don't worry about it.

- Walt

aamato1@gmail.com wrote:

>RC,
>
>Okay, I'm just getting a little confused here. Is the way you initially
>explained to enter the Cendant spin-off, the correct way to enter it or
>do any modifications need to be made due to Walt's points?
>
>I entered it in the way you explained it and it seems correct to me. Am
>I missing something?
>
>I'm not sure if it matter at this time but I'm using Quicken 2006.
>
>Thanks.
>Anthony
>
>R. C. White wrote:
>> Hi, Walt.
>>
>> First, I apologize for coming on too strong in my post yesterday. When I
>> took another look at the Dummy entries I made yesterday to record Cendant's
>> example, I saw that Quicken has CHANGED my entries! I know I did not use
>> RtrnCap or Buy, but that is how the entries are now shown in my Register.
>>
>> I'm tempted to put the rest of my comments inline, but I want to change the
>> sequence so I'll just quote extensively and add comments...
>>
>> > Enter an Add Shares transaction and you will
>> > see that there is a transaction date and a Date acquired (basis date).
>> > This was added some years back when they fixed most of their basis
>> > date bug.
>>
>> I've seen some discussion of this here, but haven't experienced it myself.
>> Now, I when I click on one of the transactions that Q changed to "Bought"
>> and then click Edit, I still don't see a place to enter a second date in the
>> Buy window. But when I click on the "Enter transaction" drop-down box and
>> choose "Add - Shares Added", I see that Q changes the window. It leaves
>> most of the numbers unchanged, but adds a "Date acquired" box, with the
>> 7/31/2006 date already filled in, and changes the "Transaction date" box to
>> 8/8/2005, the date I used for my dummy purchase of C. It also adds a Memo
>> entry: "Non taxable spin-off on 7/31/2006".
>>
>> In your experience, does this allow Q to produce both proper historical
>> statements and investment statistics (using the transaction date) and proper
>> tax results (using the original date of the C acquisition for all 3 issues)?
>> For example, would a 12/31/05 balance sheet show any shares of Realogy or
>> Wyndham?
>>
>> >>> What I still don't understand is why Quicken puts the Buy and Return
>> >>> of Capital transactions back on the original purchase date of the
>> >>> parent company, in this case Cendant.
>> >>
>> >>If you are showing a Buy, you are doing it wrong. If you show a Return of
>> >>Capital, then you are doing it wrong.
>> >
>> > Are you saying that's not how Quicken records a tax-free spinoff? (If
>> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
>>
>> I now agree that this is how Quicken handles it. And we agree that Quicken
>> does it wrong.
>>
>> YOU were not doing it wrong, but Quicken was changing it after you entered
>> it. Q now does it wrong but gets the right answer. As you said:
>>
>> > There's no Spinoff transaction in a Quicken register, but the spinoff
>> > can be correctly recorded by doing what I suggested in the above post
>> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
>> > transactions (found in the register on the basis date) to Add and
>> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
>> > but I believe the effect is the same as if Quicken had a proper
>> > spinoff transaction.
>>
>> Agreed.
>>
>> Now that we agree on "simple" spinoffs of a single subsidiary, let's talk
>> about multiple simultaneous spinoffs from a single corporation.
>>
>> >>Step by step, in Quicken, how do you handle multiple
>> >>simultaneous spinoffs from a single corporation?
>>
>> Do you disagree with my treatment? That is, for the first spinoff, show the
>> FMV ("Cost", as Q calls it) of the parent by including the FMV of any one or
>> more remaining subs. Then, for the final spinoff, use the FMV of the parent
>> only. This works in my dummy transactions, but I haven't had a chance to
>> test it in the real world.
>>
>> The whole theory of allocating cost or basis in a spinoff. of course, is
>> that the original basis will be allocated in the ratios of fair market
>> values after the transaction. Since Q handles only a single spinoff at a
>> time, the first transaction recorded must allocate the old basis between FMV
>> of the new sub and the parent, but the parent's FMV still includes the FMV
>> of any remaining subs. If there are more than two subs being spun off, then
>> we have to exclude the FMV of subs already spun off, but include any
>> remaining subs. When we get down to the last one, the allocation will be
>> like a single spinoff, using the post-spinoff FMV of the stripped-down
>> parent alone and of that last sub.
>>
>> I haven't had to do an OID transaction in a while, so I'll let you handle
>> that one. ;<)
>>
>> Thanks again for pointing out the way Quicken handles spinoffs nowadays!
>> And I hope that all my cutting and pasting hasn't made my post too
>> confusing. ;^}
>>
>> RC
>> --
>> R. C. White, CPA [RC]
>> San Marcos, TX
>> (Retired. No longer licensed to practice public accounting.)
>> rc@grandecom.net
>> Microsoft Windows MVP
>> (currently running Windows Mail 7 in Vista x64 Build 5472)
>>
>> >
>> >>Hi, Walt.
>> >>
>> >>> Apparently Quicken now correctly calculates the cost basis for
>> >>> multiple spinoffs. This wasn't the case four years ago.
>> >>
>> >>Are you sure? Step by step, in Quicken, how do you handle multiple
>> >>simultaneous spinoffs from a single corporation?
>> >>
>> > I was sure four years ago, but since it works in Q06 there's no point
>> > in trying to reconstruct a fixed bug.
>> >
>> >>> This causes the spun-off shares
>> >>> to appear in the account long before they are actually there, messing
>> >>> up the historical records, net worth calculations, etc.
>> >>
>> >>Yes, sadly, this is what happens in Quicken. :>( It has always been this
>> >>way in Quicken, so far as I know. To correct the situation would take a
>> >>large investment of programming effort, I suspect. The program would have
>> >>to keep track of both the real-life dates and the "as if" dates that the
>> >>tax
>> >>code prescribes.
>> >
>> > It already does that. Enter an Add Shares transaction and you will
>> > see that there is a transaction date and a Date acquired (basis date).
>> > This was added some years back when they fixed most of their basis
>> > date bug. That took them five years to fix, because of the
>> > programming effort you mention.
>> >
>> > However, although they now have the tools to record a spinoff
>> > correctly, for some reason they still don't.
>> >
>> >>> What I still don't understand is why Quicken puts the Buy and Return
>> >>> of Capital transactions back on the original purchase date of the
>> >>> parent company, in this case Cendant.
>> >>
>> >>If you are showing a Buy, you are doing it wrong. If you show a Return of
>> >>Capital, then you are doing it wrong.
>> >
>> > Are you saying that's not how Quicken records a tax-free spinoff? (If
>> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
>> >
>> > There's no Spinoff transaction in a Quicken register, but the spinoff
>> > can be correctly recorded by doing what I suggested in the above post
>> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
>> > transactions (found in the register on the basis date) to Add and
>> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
>> > but I believe the effect is the same as if Quicken had a proper
>> > spinoff transaction.
>> >
>> > RtrnCapX to the same account is the same as a basis adjustment. This
>> > is useful in other contexts. For example, when I do my taxes and have
>> > to record Original Issue Discount (as on a zero coupon bond or
>> > inflation-adjusted T-bill), I adjust the basis upward by entering a
>> > Return of Capital for >> minus << the OID amount, with the same
>> > account as the transfer account. This adjusts the basis without
>> > changing the acount's cash balance.
>> >
>> > Without adjusting the basis upward for OID, there is a risk of paying
>> > tax twice, once on the OID and once as a capital gain when the
>> > security is sold.

Posted by R. C. White on August 10, 2006, 4:23 pm
Please log in for more thread options
 Hi, Anthony.

Sorry for the confusion. Yes, my original explanation was correct. My post
from this morning was confusing because my first draft was accidentally
deleted and I had to start over - and by that time, my train of thought was
derailed.

I was confused by Walt's first response since I had not noticed that Q2006
changed my entries after I made them! It converted them to a RtrnCap and a
Buy. That is not correct and it is not what I entered but it gets the right
answer in the end, with the added benefit that it preserves both the
transaction date and the acquisition date for the spun-off shares.

Also, it's more confusing because of Quicken's terminology ("cost" where it
should say "fair market value immediately after the spinoff") and because
the program does not provide a way to record multiple simultaneous spinoffs.

We could work this out with pencil and paper in about 5 minutes. The hard
part is getting it into Quicken.

RC
--
R. C. White, CPA [RC]
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(currently running Windows Mail 7 in Vista x64 Build 5472)

> RC,
>
> Okay, I'm just getting a little confused here. Is the way you initially
> explained to enter the Cendant spin-off, the correct way to enter it or
> do any modifications need to be made due to Walt's points?
>
> I entered it in the way you explained it and it seems correct to me. Am
> I missing something?
>
> I'm not sure if it matter at this time but I'm using Quicken 2006.
>
> Thanks.
> Anthony
>
> R. C. White wrote:
>> Hi, Walt.
>>
>> First, I apologize for coming on too strong in my post yesterday. When I
>> took another look at the Dummy entries I made yesterday to record
>> Cendant's
>> example, I saw that Quicken has CHANGED my entries! I know I did not use
>> RtrnCap or Buy, but that is how the entries are now shown in my Register.
>>
>> I'm tempted to put the rest of my comments inline, but I want to change
>> the
>> sequence so I'll just quote extensively and add comments...
>>
>> > Enter an Add Shares transaction and you will
>> > see that there is a transaction date and a Date acquired (basis date).
>> > This was added some years back when they fixed most of their basis
>> > date bug.
>>
>> I've seen some discussion of this here, but haven't experienced it
>> myself.
>> Now, I when I click on one of the transactions that Q changed to "Bought"
>> and then click Edit, I still don't see a place to enter a second date in
>> the
>> Buy window. But when I click on the "Enter transaction" drop-down box
>> and
>> choose "Add - Shares Added", I see that Q changes the window. It leaves
>> most of the numbers unchanged, but adds a "Date acquired" box, with the
>> 7/31/2006 date already filled in, and changes the "Transaction date" box
>> to
>> 8/8/2005, the date I used for my dummy purchase of C. It also adds a
>> Memo
>> entry: "Non taxable spin-off on 7/31/2006".
>>
>> In your experience, does this allow Q to produce both proper historical
>> statements and investment statistics (using the transaction date) and
>> proper
>> tax results (using the original date of the C acquisition for all 3
>> issues)?
>> For example, would a 12/31/05 balance sheet show any shares of Realogy or
>> Wyndham?
>>
>> >>> What I still don't understand is why Quicken puts the Buy and Return
>> >>> of Capital transactions back on the original purchase date of the
>> >>> parent company, in this case Cendant.
>> >>
>> >>If you are showing a Buy, you are doing it wrong. If you show a Return
>> >>of
>> >>Capital, then you are doing it wrong.
>> >
>> > Are you saying that's not how Quicken records a tax-free spinoff? (If
>> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
>>
>> I now agree that this is how Quicken handles it. And we agree that
>> Quicken
>> does it wrong.
>>
>> YOU were not doing it wrong, but Quicken was changing it after you
>> entered
>> it. Q now does it wrong but gets the right answer. As you said:
>>
>> > There's no Spinoff transaction in a Quicken register, but the spinoff
>> > can be correctly recorded by doing what I suggested in the above post
>> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
>> > transactions (found in the register on the basis date) to Add and
>> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
>> > but I believe the effect is the same as if Quicken had a proper
>> > spinoff transaction.
>>
>> Agreed.
>>
>> Now that we agree on "simple" spinoffs of a single subsidiary, let's talk
>> about multiple simultaneous spinoffs from a single corporation.
>>
>> >>Step by step, in Quicken, how do you handle multiple
>> >>simultaneous spinoffs from a single corporation?
>>
>> Do you disagree with my treatment? That is, for the first spinoff, show
>> the
>> FMV ("Cost", as Q calls it) of the parent by including the FMV of any one
>> or
>> more remaining subs. Then, for the final spinoff, use the FMV of the
>> parent
>> only. This works in my dummy transactions, but I haven't had a chance to
>> test it in the real world.
>>
>> The whole theory of allocating cost or basis in a spinoff. of course, is
>> that the original basis will be allocated in the ratios of fair market
>> values after the transaction. Since Q handles only a single spinoff at a
>> time, the first transaction recorded must allocate the old basis between
>> FMV
>> of the new sub and the parent, but the parent's FMV still includes the
>> FMV
>> of any remaining subs. If there are more than two subs being spun off,
>> then
>> we have to exclude the FMV of subs already spun off, but include any
>> remaining subs. When we get down to the last one, the allocation will be
>> like a single spinoff, using the post-spinoff FMV of the stripped-down
>> parent alone and of that last sub.
>>
>> I haven't had to do an OID transaction in a while, so I'll let you handle
>> that one. ;<)
>>
>> Thanks again for pointing out the way Quicken handles spinoffs nowadays!
>> And I hope that all my cutting and pasting hasn't made my post too
>> confusing. ;^}
>>
>> RC
>>
>> >
>> >>Hi, Walt.
>> >>
>> >>> Apparently Quicken now correctly calculates the cost basis for
>> >>> multiple spinoffs. This wasn't the case four years ago.
>> >>
>> >>Are you sure? Step by step, in Quicken, how do you handle multiple
>> >>simultaneous spinoffs from a single corporation?
>> >>
>> > I was sure four years ago, but since it works in Q06 there's no point
>> > in trying to reconstruct a fixed bug.
>> >
>> >>> This causes the spun-off shares
>> >>> to appear in the account long before they are actually there, messing
>> >>> up the historical records, net worth calculations, etc.
>> >>
>> >>Yes, sadly, this is what happens in Quicken. :>( It has always been
>> >>this
>> >>way in Quicken, so far as I know. To correct the situation would take
>> >>a
>> >>large investment of programming effort, I suspect. The program would
>> >>have
>> >>to keep track of both the real-life dates and the "as if" dates that
>> >>the
>> >>tax
>> >>code prescribes.
>> >
>> > It already does that. Enter an Add Shares transaction and you will
>> > see that there is a transaction date and a Date acquired (basis date).
>> > This was added some years back when they fixed most of their basis
>> > date bug. That took them five years to fix, because of the
>> > programming effort you mention.
>> >
>> > However, although they now have the tools to record a spinoff
>> > correctly, for some reason they still don't.
>> >
>> >>> What I still don't understand is why Quicken puts the Buy and Return
>> >>> of Capital transactions back on the original purchase date of the
>> >>> parent company, in this case Cendant.
>> >>
>> >>If you are showing a Buy, you are doing it wrong. If you show a Return
>> >>of
>> >>Capital, then you are doing it wrong.
>> >
>> > Are you saying that's not how Quicken records a tax-free spinoff? (If
>> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
>> >
>> > There's no Spinoff transaction in a Quicken register, but the spinoff
>> > can be correctly recorded by doing what I suggested in the above post
>> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
>> > transactions (found in the register on the basis date) to Add and
>> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
>> > but I believe the effect is the same as if Quicken had a proper
>> > spinoff transaction.
>> >
>> > RtrnCapX to the same account is the same as a basis adjustment. This
>> > is useful in other contexts. For example, when I do my taxes and have
>> > to record Original Issue Discount (as on a zero coupon bond or
>> > inflation-adjusted T-bill), I adjust the basis upward by entering a
>> > Return of Capital for >> minus << the OID amount, with the same
>> > account as the transfer account. This adjusts the basis without
>> > changing the acount's cash balance.
>> >
>> > Without adjusting the basis upward for OID, there is a risk of paying
>> > tax twice, once on the OID and once as a capital gain when the
>> > security is sold.


Posted by aamato1 on August 10, 2006, 11:44 pm
Please log in for more thread options
RC,

I agree, it took me 5 minutes to figure out the allocation on paper but
i had so much trouble getting it into Quicken...you would think it
should be the opposite way. Anyway thanks again to you and Walt.

Anthony

R. C. White wrote:
> Hi, Anthony.
>
> Sorry for the confusion. Yes, my original explanation was correct. My post
> from this morning was confusing because my first draft was accidentally
> deleted and I had to start over - and by that time, my train of thought was
> derailed.
>
> I was confused by Walt's first response since I had not noticed that Q2006
> changed my entries after I made them! It converted them to a RtrnCap and a
> Buy. That is not correct and it is not what I entered but it gets the right
> answer in the end, with the added benefit that it preserves both the
> transaction date and the acquisition date for the spun-off shares.
>
> Also, it's more confusing because of Quicken's terminology ("cost" where it
> should say "fair market value immediately after the spinoff") and because
> the program does not provide a way to record multiple simultaneous spinoffs.
>
> We could work this out with pencil and paper in about 5 minutes. The hard
> part is getting it into Quicken.
>
> RC
> --
> R. C. White, CPA [RC]
> San Marcos, TX
> (Retired. No longer licensed to practice public accounting.)
> rc@grandecom.net
> Microsoft Windows MVP
> (currently running Windows Mail 7 in Vista x64 Build 5472)
>
> > RC,
> >
> > Okay, I'm just getting a little confused here. Is the way you initially
> > explained to enter the Cendant spin-off, the correct way to enter it or
> > do any modifications need to be made due to Walt's points?
> >
> > I entered it in the way you explained it and it seems correct to me. Am
> > I missing something?
> >
> > I'm not sure if it matter at this time but I'm using Quicken 2006.
> >
> > Thanks.
> > Anthony
> >
> > R. C. White wrote:
> >> Hi, Walt.
> >>
> >> First, I apologize for coming on too strong in my post yesterday. When I
> >> took another look at the Dummy entries I made yesterday to record
> >> Cendant's
> >> example, I saw that Quicken has CHANGED my entries! I know I did not use
> >> RtrnCap or Buy, but that is how the entries are now shown in my Register.
> >>
> >> I'm tempted to put the rest of my comments inline, but I want to change
> >> the
> >> sequence so I'll just quote extensively and add comments...
> >>
> >> > Enter an Add Shares transaction and you will
> >> > see that there is a transaction date and a Date acquired (basis date).
> >> > This was added some years back when they fixed most of their basis
> >> > date bug.
> >>
> >> I've seen some discussion of this here, but haven't experienced it
> >> myself.
> >> Now, I when I click on one of the transactions that Q changed to "Bought"
> >> and then click Edit, I still don't see a place to enter a second date in
> >> the
> >> Buy window. But when I click on the "Enter transaction" drop-down box
> >> and
> >> choose "Add - Shares Added", I see that Q changes the window. It leaves
> >> most of the numbers unchanged, but adds a "Date acquired" box, with the
> >> 7/31/2006 date already filled in, and changes the "Transaction date" box
> >> to
> >> 8/8/2005, the date I used for my dummy purchase of C. It also adds a
> >> Memo
> >> entry: "Non taxable spin-off on 7/31/2006".
> >>
> >> In your experience, does this allow Q to produce both proper historical
> >> statements and investment statistics (using the transaction date) and
> >> proper
> >> tax results (using the original date of the C acquisition for all 3
> >> issues)?
> >> For example, would a 12/31/05 balance sheet show any shares of Realogy or
> >> Wyndham?
> >>
> >> >>> What I still don't understand is why Quicken puts the Buy and Return
> >> >>> of Capital transactions back on the original purchase date of the
> >> >>> parent company, in this case Cendant.
> >> >>
> >> >>If you are showing a Buy, you are doing it wrong. If you show a Return
> >> >>of
> >> >>Capital, then you are doing it wrong.
> >> >
> >> > Are you saying that's not how Quicken records a tax-free spinoff? (If
> >> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
> >>
> >> I now agree that this is how Quicken handles it. And we agree that
> >> Quicken
> >> does it wrong.
> >>
> >> YOU were not doing it wrong, but Quicken was changing it after you
> >> entered
> >> it. Q now does it wrong but gets the right answer. As you said:
> >>
> >> > There's no Spinoff transaction in a Quicken register, but the spinoff
> >> > can be correctly recorded by doing what I suggested in the above post
> >> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
> >> > transactions (found in the register on the basis date) to Add and
> >> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
> >> > but I believe the effect is the same as if Quicken had a proper
> >> > spinoff transaction.
> >>
> >> Agreed.
> >>
> >> Now that we agree on "simple" spinoffs of a single subsidiary, let's talk
> >> about multiple simultaneous spinoffs from a single corporation.
> >>
> >> >>Step by step, in Quicken, how do you handle multiple
> >> >>simultaneous spinoffs from a single corporation?
> >>
> >> Do you disagree with my treatment? That is, for the first spinoff, show
> >> the
> >> FMV ("Cost", as Q calls it) of the parent by including the FMV of any one
> >> or
> >> more remaining subs. Then, for the final spinoff, use the FMV of the
> >> parent
> >> only. This works in my dummy transactions, but I haven't had a chance to
> >> test it in the real world.
> >>
> >> The whole theory of allocating cost or basis in a spinoff. of course, is
> >> that the original basis will be allocated in the ratios of fair market
> >> values after the transaction. Since Q handles only a single spinoff at a
> >> time, the first transaction recorded must allocate the old basis between
> >> FMV
> >> of the new sub and the parent, but the parent's FMV still includes the
> >> FMV
> >> of any remaining subs. If there are more than two subs being spun off,
> >> then
> >> we have to exclude the FMV of subs already spun off, but include any
> >> remaining subs. When we get down to the last one, the allocation will be
> >> like a single spinoff, using the post-spinoff FMV of the stripped-down
> >> parent alone and of that last sub.
> >>
> >> I haven't had to do an OID transaction in a while, so I'll let you handle
> >> that one. ;<)
> >>
> >> Thanks again for pointing out the way Quicken handles spinoffs nowadays!
> >> And I hope that all my cutting and pasting hasn't made my post too
> >> confusing. ;^}
> >>
> >> RC
> >>
> >> >
> >> >>Hi, Walt.
> >> >>
> >> >>> Apparently Quicken now correctly calculates the cost basis for
> >> >>> multiple spinoffs. This wasn't the case four years ago.
> >> >>
> >> >>Are you sure? Step by step, in Quicken, how do you handle multiple
> >> >>simultaneous spinoffs from a single corporation?
> >> >>
> >> > I was sure four years ago, but since it works in Q06 there's no point
> >> > in trying to reconstruct a fixed bug.
> >> >
> >> >>> This causes the spun-off shares
> >> >>> to appear in the account long before they are actually there, messing
> >> >>> up the historical records, net worth calculations, etc.
> >> >>
> >> >>Yes, sadly, this is what happens in Quicken. :>( It has always been
> >> >>this
> >> >>way in Quicken, so far as I know. To correct the situation would take
> >> >>a
> >> >>large investment of programming effort, I suspect. The program would
> >> >>have
> >> >>to keep track of both the real-life dates and the "as if" dates that
> >> >>the
> >> >>tax
> >> >>code prescribes.
> >> >
> >> > It already does that. Enter an Add Shares transaction and you will
> >> > see that there is a transaction date and a Date acquired (basis date).
> >> > This was added some years back when they fixed most of their basis
> >> > date bug. That took them five years to fix, because of the
> >> > programming effort you mention.
> >> >
> >> > However, although they now have the tools to record a spinoff
> >> > correctly, for some reason they still don't.
> >> >
> >> >>> What I still don't understand is why Quicken puts the Buy and Return
> >> >>> of Capital transactions back on the original purchase date of the
> >> >>> parent company, in this case Cendant.
> >> >>
> >> >>If you are showing a Buy, you are doing it wrong. If you show a Return
> >> >>of
> >> >>Capital, then you are doing it wrong.
> >> >
> >> > Are you saying that's not how Quicken records a tax-free spinoff? (If
> >> > so, I disagree.) Or are you saying Quicken does it wrong? (I agree.)
> >> >
> >> > There's no Spinoff transaction in a Quicken register, but the spinoff
> >> > can be correctly recorded by doing what I suggested in the above post
> >> > - entering the spinoff, and then changing Quicken's Buy and RtrnCap
> >> > transactions (found in the register on the basis date) to Add and
> >> > RtrnCapX transactions on the spinoff date. The labels might be wrong,
> >> > but I believe the effect is the same as if Quicken had a proper
> >> > spinoff transaction.
> >> >
> >> > RtrnCapX to the same account is the same as a basis adjustment. This
> >> > is useful in other contexts. For example, when I do my taxes and have
> >> > to record Original Issue Discount (as on a zero coupon bond or
> >> > inflation-adjusted T-bill), I adjust the basis upward by entering a
> >> > Return of Capital for >> minus << the OID amount, with the same
> >> > account as the transfer account. This adjusts the basis without
> >> > changing the acount's cash balance.
> >> >
> >> > Without adjusting the basis upward for OID, there is a risk of paying
> >> > tax twice, once on the OID and once as a capital gain when the
> >> > security is sold.


Posted by Walt Bilofsky on August 10, 2006, 2:24 pm
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Hi, RC -


>First, I apologize for coming on too strong in my post yesterday ...

No problem.

> When I
>took another look at the Dummy entries I made yesterday to record Cendant's
>example, I saw that Quicken has CHANGED my entries! I know I did not use
>RtrnCap or Buy, but that is how the entries are now shown in my Register.

When you enter a spinoff, Quicken puts those two transactions in the
register. There is no "spinoff" transaction per se.

>Now, I when I click on one of the transactions that Q changed to "Bought"
>and then click Edit, I still don't see a place to enter a second date in the
>Buy window. But when I click on the "Enter transaction" drop-down box and
>choose "Add - Shares Added", I see that Q changes the window. It leaves
>most of the numbers unchanged, but adds a "Date acquired" box, with the
>7/31/2006 date already filled in, and changes the "Transaction date" box to
>8/8/2005, the date I used for my dummy purchase of C. It also adds a Memo
>entry: "Non taxable spin-off on 7/31/2006".

Right. In a Bought transaction, the basis date is hidden - you can't
edit it. When you convert Bought to Add, you can edit both dates. And
a good thing too, because you have to swap the dates.
>
>In your experience, does this allow Q to produce both proper historical
>statements and investment statistics (using the transaction date) and proper
>tax results

I think so, but I always feel better when someone checks me. :-)
>
>Do you disagree with my treatment? That is, for the first spinoff, show the
>FMV ("Cost", as Q calls it) of the parent by including the FMV of any one or
>more remaining subs.

Your treatment is correct. It gets the basis and all the dates
correct for tax purposes. (It might not in older versions of Quicken,
but Q2006 handles it right.)

The only problem, as we have discussed at length, is that the spun-off
stocks appear in the account before they should. My fix takes care of
that.

- Walt

Posted by R. C. White on August 10, 2006, 4:08 pm
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Hi, Walt - and Anthony.

> Your treatment is correct. It gets the basis and all the dates
> correct for tax purposes. (It might not in older versions of Quicken,
> but Q2006 handles it right.)

Good! Case closed - I hope. ;<)

As we said long ago, the hard part is entering it into Quicken. Using
pencil and paper, we could have calculated the whole deal in about 5
minutes.

My post from this morning is now not at all clear to ME. :>( I had my
original version all typed, then goofed somehow and lost it. When I had to
type it all again, I was impatient - and a little disgusted - so some of the
points were made not so clearly. I think the gist of the message came
through, but I wonder how it will be interpreted when this question comes up
in the newsgroup again a few years from now and somebody finds this exchange
in the archives. ;^}

RC
--
R. C. White, CPA [RC]
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(currently running Windows Mail 7 in Vista x64 Build 5472)

> Hi, RC -
>
>
>>First, I apologize for coming on too strong in my post yesterday ...
>
> No problem.
>
>> When I
>>took another look at the Dummy entries I made yesterday to record
>>Cendant's
>>example, I saw that Quicken has CHANGED my entries! I know I did not use
>>RtrnCap or Buy, but that is how the entries are now shown in my Register.
>
> When you enter a spinoff, Quicken puts those two transactions in the
> register. There is no "spinoff" transaction per se.
>
>>Now, I when I click on one of the transactions that Q changed to "Bought"
>>and then click Edit, I still don't see a place to enter a second date in
>>the
>>Buy window. But when I click on the "Enter transaction" drop-down box and
>>choose "Add - Shares Added", I see that Q changes the window. It leaves
>>most of the numbers unchanged, but adds a "Date acquired" box, with the
>>7/31/2006 date already filled in, and changes the "Transaction date" box
>>to
>>8/8/2005, the date I used for my dummy purchase of C. It also adds a Memo
>>entry: "Non taxable spin-off on 7/31/2006".
>
> Right. In a Bought transaction, the basis date is hidden - you can't
> edit it. When you convert Bought to Add, you can edit both dates. And
> a good thing too, because you have to swap the dates.
>>
>>In your experience, does this allow Q to produce both proper historical
>>statements and investment statistics (using the transaction date) and
>>proper
>>tax results
>
> I think so, but I always feel better when someone checks me. :-)
>>
>>Do you disagree with my treatment? That is, for the first spinoff, show
>>the
>>FMV ("Cost", as Q calls it) of the parent by including the FMV of any one
>>or
>>more remaining subs.
>
> Your treatment is correct. It gets the basis and all the dates
> correct for tax purposes. (It might not in older versions of Quicken,
> but Q2006 handles it right.)
>
> The only problem, as we have discussed at length, is that the spun-off
> stocks appear in the account before they should. My fix takes care of
> that.
>
> - Walt


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