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Windstream Spinoff of Communications Sales & Leasing Inc

mshiggins
mshiggins SuperUser ✭✭✭✭✭
edited January 2019 in Investing (Windows)

I'm having trouble figuring out the transactions for entering the Windstream (WIN) to Communications Sales & Leasing Inc (CSAL) spinoff and subsequent 6:1 reverse stock split on Windstream.

Can anyone advise on how to enter these transactions?

Quicken user since Q1999. Currently using QW2017.
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Comments

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    C'mon mshiggins, you know the drill ... what's the spinoff ratio's? Any fractional shares?  Cash in lieu?  Fractional shares on the reverse split?  Cash in lieu?
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018

    I can understand the confusion. Normal caveats apply, and I am not an owner of WIN or CSAL - no dog in the show.


    I'll start with their opening values this morning: WIN @ 11.72, CSAL @ 28.44. When they publish their Form 8937, they may well use different values, so be prepared for making a change if you choose to. The WIN valuation appears to be after the reverse split. So if one started with 1200 shares at the close on 4/24 (to make the math easy), on Monday morning 4/27, you had 200 shares of WIN @ 11.72 = $2,344 and 240 shares of CSAL @ 28.44 = $6,825.60 for a total value of $9,169.60 -- 25.563% in WIN, 74.437% in CSAL. Those would be percentages you could use to allocate your cost basis per lot to the two holdings. (Their form 8937 will likely use different share prices and come up with different percentages, but these should be close).


    With that info, I would then choose the Remove Shares (of WIN) followed by Add Shares of WIN (1/6 the original number of shares - again per lot) and Add Shares of CSAL (1/5 the original number of shares - per lot). That specific process incorporates both the spinoff and the reverse-split.


    If any fraction shares are created, sell them for the cash-in-lieu value you will be receiving shortly.


    Other methods are available depending on individual preferences. One thing I like about this is that you can rather easily revise the cost basis to other values if you need to when further information comes forth.


    HTH
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    I can understand the confusion. Normal caveats apply, and I am not an owner of WIN or CSAL - no dog in the show.


    I'll start with their opening values this morning: WIN @ 11.72, CSAL @ 28.44. When they publish their Form 8937, they may well use different values, so be prepared for making a change if you choose to. The WIN valuation appears to be after the reverse split. So if one started with 1200 shares at the close on 4/24 (to make the math easy), on Monday morning 4/27, you had 200 shares of WIN @ 11.72 = $2,344 and 240 shares of CSAL @ 28.44 = $6,825.60 for a total value of $9,169.60 -- 25.563% in WIN, 74.437% in CSAL. Those would be percentages you could use to allocate your cost basis per lot to the two holdings. (Their form 8937 will likely use different share prices and come up with different percentages, but these should be close).


    With that info, I would then choose the Remove Shares (of WIN) followed by Add Shares of WIN (1/6 the original number of shares - again per lot) and Add Shares of CSAL (1/5 the original number of shares - per lot). That specific process incorporates both the spinoff and the reverse-split.


    If any fraction shares are created, sell them for the cash-in-lieu value you will be receiving shortly.


    Other methods are available depending on individual preferences. One thing I like about this is that you can rather easily revise the cost basis to other values if you need to when further information comes forth.


    HTH

    Thanks, Lurker. I was thinking to use the trick to create a temporary brokerage account, transfer the shares to the temp account, perform the spinoff there, and transfer back to the original account. Not sure where/when to apply the split, though. I'll have to try it out and see which approach makes the most sense.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    I can understand the confusion. Normal caveats apply, and I am not an owner of WIN or CSAL - no dog in the show.


    I'll start with their opening values this morning: WIN @ 11.72, CSAL @ 28.44. When they publish their Form 8937, they may well use different values, so be prepared for making a change if you choose to. The WIN valuation appears to be after the reverse split. So if one started with 1200 shares at the close on 4/24 (to make the math easy), on Monday morning 4/27, you had 200 shares of WIN @ 11.72 = $2,344 and 240 shares of CSAL @ 28.44 = $6,825.60 for a total value of $9,169.60 -- 25.563% in WIN, 74.437% in CSAL. Those would be percentages you could use to allocate your cost basis per lot to the two holdings. (Their form 8937 will likely use different share prices and come up with different percentages, but these should be close).


    With that info, I would then choose the Remove Shares (of WIN) followed by Add Shares of WIN (1/6 the original number of shares - again per lot) and Add Shares of CSAL (1/5 the original number of shares - per lot). That specific process incorporates both the spinoff and the reverse-split.


    If any fraction shares are created, sell them for the cash-in-lieu value you will be receiving shortly.


    Other methods are available depending on individual preferences. One thing I like about this is that you can rather easily revise the cost basis to other values if you need to when further information comes forth.


    HTH

    That 'trick' works and might help if there are a lot of lots involved - like when a DRP has been in place.  I have not used it often and may not have used it in my real data.  I know I did try it in a test file effectively, but we all know the possible limitations there.  Since WIN is in part a REIT, and there may be multiple RtrnCaps involved(?), I'd be really careful with the data.  You would need to have a real solid handle on the true and proper cost basis for each lot.  

    If you want to pursue the TempAccount approach with then using the Spinoff and StkSplit, in that Temp Account, My first thought would be to enter the StkSplt first as a 1-new to 6-old ratio.  The StkSplt transaction is well set up for that.  Then for the subsequent Spinoff, it would be 1.2 shares new for each share of old with the prices I cited above (or from other sources).  As I think about it, the Spinoff first could also be done at the 0.2 new for each old share, but you would have to fabricate an effective price to use - not the 11.72 I used above.  I think it would be 1/6 of that value (1.95333) get the right 25+% / 75-% basis allocation.  Then you could still apply the standard 1-for-6 reverse split.
  • Unknown
    Unknown Member
    edited December 2018

    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    Since you did not indicate anything about your unsuccessful attempt - what you tried to do, how you tried to do it, what came out wrong, why you thought it was wrong, etc., I am reluctant to offer any advice, lest I lead you along the same path.  Secondly, while this can be done in a 'simple way', that may not be the best way depending upon your needs and objectives.  Above, I offered my opinion about the best way.  You might expand upon why that is not adequate or what you did not understand about it.  We are in an information age.  Provide some.
  • Unknown
    Unknown Member
    edited July 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    Sorry, I didn't realize my mistakes would be helpful but happy to share.  I own WIN in 3 accounts with multiple lots so I need to correctly transfer cost basis as part of the transaction.  I tried to do this with the corporate spinoff transaction. I got the ratio backwards.  I guess it should be .2 rather than 5.  I also screwed up with my guess as to what the cost of new shares/old shares.  Other than that, I did just fine :-)  So I ended up with lots more shares of CS&L and a bunch of cash I shouldn't have.
    Perhaps you can enlighten me as to what the cost of new shares, cost of old shares equates to.
    It doesn't appear you are using the Corporate Spinoff transaction option.  Do you not recommend that approach?  Thanks.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    I prefer not to use the Corporate Spinoff macrotransaction. That process adds two transactions backdated to when you acquired each lot.  The two transactions are a RtrnCap and a Buy Shares.  For me, this distorts history.  My prior recommendations worked with those transaction redating them to current times with some additional tweaks.  Those recommendations overcame the distorted history aspect but I found the transaction editing excessively cumbersome.  Further, I came to not trust how the RtrnCap transaction acted in various circumstances.  Subsequently, I have moved to prefer a methodology of one Remove Shares transaction (for the old company) followed by pairs of Add Shares transactions (one for the old company, one for the spinoff).  This approach requires you to do some math up front to get the proper cost basis assigned to each lot of each company.  Since I was doing the math already for confirmation that Quicken got it right, this really was no extra work for me.  The Remove Shares / Add Shares approach was what I referred the original poster to.  

    If you want to do the Corporate Spinoff and the StkSplt transactions, I would do the 1-for-6 StkSplt first, then use the fair market values (opening prices) I cited above in the Corporate Spinoff transaction with a 1.2-for-1 share ratio.  In reality the spinoff came first at a 1 for 5 ratio, but the net effect is the same.  Doing the split first allows you to use 4/27/15 pricing directly in the determination of fair market values.  Again as stated previously, WIN and CSAL will be publishing an IRS Form 8937 with their suggestions in the next 45 days.  

    I have identified a technique that combines the processes - uses Corporate Spinoffs to do the math, but ends up with only Remove Shares & Add Shares.  If you would like further details on either editing transactions to correct history or using this newer less tested technique, I'll be happy to supply further info.  

    Note that my objective with my Quicken data is to have an accurate presentation of both fair market value and cost basis for all times.  Thus I can make realistic decisions with respect to cap gains impacts and also cross check cap gains reported by brokerages at end of year and throughout the year.  Similarly performance data is more accurate.  Others are not as compulsive about such data.  Personal objectives do matter in how one handles their Quicken data.

    It is to your credit that you had a good backup at hand to recover from your adventure.
  • Unknown
    Unknown Member
    edited July 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    Thanks.  I am pretty compulsive myself when it comes to my Quicken records and, like you, I don't like the backdated transactions that result from the Corporate Spinoff entry.  I do note that when I download from my broker, they only show add/remove entries.  
    But I am wondering about how your "compulsive" nature deals with the acquistion/add dates when using the Add Shares.  Since for LTCG's purposes we want to transfer the original acquisition date to the spin-off shares, does that not also result in some distorted financial history?  Or there is no distortion since the spin-off didn't exist and therefore has no prices to distort history?  Or do you just use the actual spinoff date and keep note of the original acquisition date for LTCG's purposes?
    I am going to wait for WIN to publish the Form 8937 before doing the entry again.  One problem I had this morning is that I couldn't find a way to edit my original spinoff entry without going thru each and every original transaction.
    Thanks for the feedback and discussion.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    Yes, making a correction to bad info requires editing each of the separate generated transactions, or deleting each of them and re-doing the Corp Spinoff with better (correct) data.  A real PITA, thus the value of the backup you wisely had available.

    The Add Shares transaction allows you to specify the cost basis of the shares and the acquisition date of the shares.  So even though the Add Shares has a transaction date of 4/24/15, the shares being added can have a very different 'date acquired' such that long term and short term cap gains are treated correctly within Quicken.  

    It is unlikely that your brokerage is downloading to you the lot-by-lot Adds that would be necessary to properly track the CSAL shares.  Even any changes to the WIN shares may be suspect in their download.  More likely, they are only offering you one Add Shares that covers all the shares owned.  In that case, I would end up simply deleting their transaction as redundant to and less helpful than the transactions I have generated.
  • Unknown
    Unknown Member
    edited May 2018

    FYI, Windstream has now posted info on its website relating to cost basis for CSAL & WIN stock.


    http://files.shareholder.com/downloads/ABEA-43PVYW/83629430x0x825217/825D9A80-5BA7-46D6-825E-2E81E43...
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited December 2016


    FYI, Windstream has now posted info on its website relating to cost basis for CSAL & WIN stock.


    http://files.shareholder.com/downloads/ABEA-43PVYW/83629430x0x825217/825D9A80-5BA7-46D6-825E-2E81E43...

    Thanks for the info!
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • jr7107
    jr7107 SuperUser ✭✭✭✭
    edited August 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    Just as FYI, brokers like Schwab list positions lot by lot historically within the monthly statements as well in the Quicken download. If you are meticulous in your recording it will match all, and the Q statements will match the broker. But you have to be aware.

    Be aware of the Add/Remove shares impact.
    Quicken user since 1994.
    Quicken Forum/Community Contributor since 2005.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    FYI, Windstream has now posted info on its website relating to cost basis for CSAL & WIN stock.


    http://files.shareholder.com/downloads/ABEA-43PVYW/83629430x0x825217/825D9A80-5BA7-46D6-825E-2E81E43...

    Thanks for posting that information.  Note that WIN/CSAL chose to use closing prices on 4/27 as the definition of fair market value whereas in my initial post I quoted opening prices on 4/27.  The final results are similar, though obviously not identical.
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited March 2017
    [mention://67812 @q.lurker] [mention://18956 @jr7107] Gainskeeper is showing that the sale of the WIN fractional shares for cash-in-lieu triggered a wash sale due to the dividend that was reinvested on 4/15/2015. I don't have much experience with wash sale rules, can you advise on whether wash sale rules are applicable in this case?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    a) wash sale rules only apply if you are selling the shares at a loss.  Are your fractional shares being sold at a loss?  
    b) it is only the sale of fractional shares that could possibly be construed as a sale; the conversion / distribution / spinoff etc. of the CSAL shares would not (IMO, note my repeated caveats) generate a wash sale event; nor would the accounting steps of reallocating basis to the ongoing WIN holding.  
    c) the sale of fractional shares is (typically) such a small amount, I can't see that I would be bothered classifying any part of it as a wash sale.
  • Unknown
    Unknown Member
    edited August 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    sorry for going off on a tangent, but...as I went to do the spinoff in quicken, i realized my original cost basis was off.  This is due to the fact that the amounts that I have been recording as dividends, actually had non-dividend distributions in it.  These affect my cost basis.    Is there an easy way to account for this?  ( I hate to do a cash balance adjustment.)
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    The first 'right way' is to edit each dividend transaction to be a smaller dividend reducing cash to the account, then add a Rtrncap transaction that adds cash to the account and reduces the security cost basis.

    The second 'right way' is to enter a year-end transaction for the RtrnCap amount for the year.  This reduces the bases and puts cash in the account.  Then enter a MiscExp transaction that spends that cash against the category _DivInc.  You are back to $0 cash and your dividend income for the year is corrected.  (Perhaps obviously, the year end consideration could be at any time you get the the information or chose to make the correction.

    Using either of those methods, I would carefully monitor how the RtrnCap was getting spread to applicable lots owned.  There can be issues that way for some holdings.  

    If those two methods prove problematic, I think you would be facing a Remove Shares / Add Shares pairing for each correction.  That approach may make performance figure inaccurate.
  • Unknown
    Unknown Member
    edited August 2016


    If someone figures out a simple way to record this spinoff and reverse split, I would be most grateful if they could post the step by step here. Having tried unsuccessfully myself, I've just finished restoring my previous file and would prefer not to do that again.

    The first suggestion was what I was I thought I had to do.  Since I have owned the stock for many years, I was dreading the large amounts of edits.  The second option is much less work.  Thank you so much for your help.
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