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How should I record this "Cash In Lieu" transaction?

Unknown
Unknown Member
edited January 2019 in Investing (Windows)

I have a "Cash In Lieu" transaction from a statement in January 2015, and I'm wondering how this should be recorded in Quicken. Details from my statement are as follows:

Trade Date: 1/30/15
Type: Cash In Lieu
Description: Telefonica SA Spons ADR Cash In Lieu Of Fractional Shares
Quantity: 0.490
Per Unit Amount: 14.327
Proceeds: 7.02
Realized Gain/Loss: 7.02 L

What I've tried:

Recording a "Div - Stock Dividend (non-cash)" transaction and entering 0.490 divided by the share balance prior to the transaction into the "New shares issued" field. Then entering a "Sell" transaction for those shares. (FWIW, this is my understanding of what has actually happened in this transaction). The reason this doesn't work is that I'm unable to achieve the $7.02 long-term capital gain in the Sell transaction regardless of which Lots I choose. I think the reason for this is that the "Div - Stock Dividend (non-cash)" transaction is actually a stock split which affects all of the previous Lots as opposed to adding a new Lot.

The other approach I've tried is to simply enter an "Inc - Income (Div, Int, etc.)" transaction with $7.02 entered in the "Long-term cap gain dist" field. This keeps my share balance and cost basis in-tact. It also keeps the grand total investment income correct, but the $7.02 is counted as "_LT CapGnDst" as opposed to "_RlzdGain" like I believe it should be classified (I could be wrong in this).

I also tried entering an "Add - Shares Added" transaction, then a Sell transaction for those shares, but ran into the same issue as approach #1.

Does anyone have feedback on how this transaction should be entered? Thanks in advance!

Comments

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 2018

    The Cash in Lieu is usually recorded as a sale of fractional shares.  It appears that you have sold 0.490 shares at 14.327 per share for a total of 7.02 on 1/30/15.  The realized gain indicates that you obtained the 0.490 shares for no cost and at a date that qualifies the gain to be treated as long term.
  • Unknown
    Unknown Member
    edited July 2016
    Sherlock said:


    The Cash in Lieu is usually recorded as a sale of fractional shares.  It appears that you have sold 0.490 shares at 14.327 per share for a total of 7.02 on 1/30/15.  The realized gain indicates that you obtained the 0.490 shares for no cost and at a date that qualifies the gain to be treated as long term.

    Hi [mention://84907 @Sherlock] , I have tried that approach. I added the fractional share through Stock Dividend transaction (also tried through Add Shares) transaction, then attempted to record a Sell transaction for that fractional share for $7.02. The problem I ran into is that no matter which Lot I selected to perform the Sell transaction, it did not match the $7.02 capital gain amount.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited December 2016
    Sherlock said:


    The Cash in Lieu is usually recorded as a sale of fractional shares.  It appears that you have sold 0.490 shares at 14.327 per share for a total of 7.02 on 1/30/15.  The realized gain indicates that you obtained the 0.490 shares for no cost and at a date that qualifies the gain to be treated as long term.

    To match the realized gain you posted, you would need to sell the .490 shares from a lot that you purchased at no cost prior to 1/30/14.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018

    Presuming this is the TEF Telefonica, in November/December time frame, they issued a scrip dividend - stock instead of cash.  (http://www.telefonica.com/en/shareholders-investors/pdf/hr_20141114.pdf)  Did you receive additional shares in that time frame?  If so, how many did you start with and how many did you receive?   It would be common that if you were due to receive 10.490 shares, you would actually receive 10 shares, and then at some slightly later date, receive the value of the 0.490 shares as cash instead of (cash-in-lieu)  as stock.  


    In that sort of circumstance, you might already have the receipt of the integer number of shares recorded.  You would more properly record that as receiving xx.490 and then be selling the 0.490 shares from that lot.  


    Stock splits will also frequently generate such cash-in-lieu events, but I did not see any such recent events during my limited research.
  • Unknown
    Unknown Member
    edited July 2016
    q.lurker said:


    Presuming this is the TEF Telefonica, in November/December time frame, they issued a scrip dividend - stock instead of cash.  (http://www.telefonica.com/en/shareholders-investors/pdf/hr_20141114.pdf)  Did you receive additional shares in that time frame?  If so, how many did you start with and how many did you receive?   It would be common that if you were due to receive 10.490 shares, you would actually receive 10 shares, and then at some slightly later date, receive the value of the 0.490 shares as cash instead of (cash-in-lieu)  as stock.  


    In that sort of circumstance, you might already have the receipt of the integer number of shares recorded.  You would more properly record that as receiving xx.490 and then be selling the 0.490 shares from that lot.  


    Stock splits will also frequently generate such cash-in-lieu events, but I did not see any such recent events during my limited research.

    Hmmm, good catch. I was narrowly focusing on the January statement. I looked back at December and see the following transactions for the security:

    Date: 12/24
    Type: Foreign Dividend
    Description: Telefonica SA Spons ADR @ $0.012285 per share
    Quantity: 612
    Per Unit Amount: 0.012
    Amount: $7.52

    Date: 12/24
    Type: Purchase
    Description: Telefonica SA Spons ADR reinvested @ $0.43 per share as part of the dividend reinvestment option
    Quantity: 17
    Per Unit Amount: $0.442
    Amount: $7.52

    So it looks like a dividend of $7.52 reinvested for 17 additional shares, and when entered this way in Quicken the # shares and cost basis match my statement. Except that's not what really happened since the stock price at the time was more like $15. Is what really happened a stock dividend of 17.xx shares, xx of which were sold a month later on my January statement? And if so, how should I record this in Quicken? What's odd about this is my statement's share balance does not show .xx at the end of December so presumably there won't be any way to record this transaction that will match the December statement. What is the 'most correct' way of entering this?

    Thanks for your help [mention://67812 @q.lurker] , much appreciated!
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:


    Presuming this is the TEF Telefonica, in November/December time frame, they issued a scrip dividend - stock instead of cash.  (http://www.telefonica.com/en/shareholders-investors/pdf/hr_20141114.pdf)  Did you receive additional shares in that time frame?  If so, how many did you start with and how many did you receive?   It would be common that if you were due to receive 10.490 shares, you would actually receive 10 shares, and then at some slightly later date, receive the value of the 0.490 shares as cash instead of (cash-in-lieu)  as stock.  


    In that sort of circumstance, you might already have the receipt of the integer number of shares recorded.  You would more properly record that as receiving xx.490 and then be selling the 0.490 shares from that lot.  


    Stock splits will also frequently generate such cash-in-lieu events, but I did not see any such recent events during my limited research.

    I am not seeing specific number on the TEF website or from other resources, so I am picking and choosing from the numbers you have put forth.  Apparently, you got a dividend worth $7.52 on or about 12/24.  That was reinvested at $0.43 yielding 17.488 or 17.49 shares.  You broker recomputed that to 7.52 / 0.442 = 17 shares even but I suspect the 0.43 was the 'right' value.  Then I think the cash-in-lieu got processed crediting you with a sale of the 0.488 or 0.49 shares.  Big question: Did you holdings go from 612 to 629 in December?  

    The only thing that makes sense here dollar-wise is selling 0.49 shares and getting $7.50 or so.  

    You may need to ask your broker for more specific details on what really transpired.
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