[moneydance] Stock spinoff

[John B. Egger]

Dave Hanson wrote:

>I had the same problem, and here's how I solved it. It's not just
>adding shares of B--you also need to adjust the basis of A because
>some of that basis shifts to B.
>
>To be concrete, let's use A=Altria and B=Kraft :-) Assume I own 100 sh
>of Altria with a basis of $8500. For each share of Altria, .692024
>shares of Kraft were distributed. Using the market value of Altria and
>Kraft on 4/2/07, .7616 of the former Altria basis goes to Altria, and
>.2384 of former Altria basis goes to Kraft. (See
>http://www.altria.com/download/pdf/Stockholder_Tax_Basis_Information.pdf).
>
>Thus, I got 100x.692024 = 69 sh of Kraft at a basis of
>69.2024x.2384x8500 = $2026.40 and my adjusted Altria basis is
>100x.7616 = $6473.40.
>
>I modeled this kind of spin off as follows:
>
>4/2/07 SellXfr  Altria 100sh for 8500; transfer acct. Equity
>4/2/07 BuyXfr Altria 100sh for 6473.40; transfer acct. Equity
>4/2/07 BuyXfr Kraft 69sh for 2026.40; transfer acct. Equity.
>
>The "Equity" account serves only as the target/source of funds in
>these (and similar) transactions. The .2024 fractional share of Kraft
>was paid in cash as a dividend.
>
>This approach yields the correct basis but the wrong date; e.g., if
>you sell Altria soon, it will look like a short term capital gain. I
>think you can set the Tax Date field to the date of your original
>purchase of Altria, but I don't seem to be able to set that field.
>
>If you purchased the Altria shares in several transactions, it's more
>complicated, and it might not matter if the $8500 is the sum of the
>basis prices of those transactions.
>dave h
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>
>  
>
Thanks, Dave... this looks good. I didn't bother with the basis, etc. 
because I am not yet using MD for tax estimates or rate of return 
calculations or anything else I can think of that might need it, but I 
think I'll make the change using your system.

-- 
--John
Registered Linux User #291592