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Reverse Morris Trust transaction using corporate securities spinoff does not record correcly

UnknownUnknown Member
edited July 2018 in Investing (Windows)
I participated in a
Reverse Morris trust transaction for LMT to LDOS in August and most recently for PG that is with COTY.
I have the necessary info for entering into Quicken, however it wants to return
the capital each time I enter it resulting in a new stock as needed, but leaving
the original shares for LMT and PG unchanged. I am using
“Corporate securities spin off” transaction. I spent over an hour on a chat with
Quicken, to no avail. I am not an accountant, but I can follow instructions.
I have Quicken for Windows 2016 r8

Comments

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    With respect to the Leidos / Lockheed martin transaction, the 8937 info is available through this site.  

    My interpretation of that situation (and I am not a tax or investment pro, do your own due diligence), is that you surrendered some number of shares of Lockheed in exchange for the Leidos shares.  Further, the basis and acquisition date(s) for the surrendered Lockheed shares transfers to the newly received Leidos shares.  

    If that understanding is correct, then in Quicken, I would enter a series of transactions similar to the following:
    1. Remove Shares transaction - removing the surrendered Lockheed shares, noting the cost basis and acquisition date for those surrendered shares.  These might be all in one lot or might be spread across several lots.  As far as I know, it would be your choice as to specifically which shares were surrendered, though practically speaking, you would want this to be consistent with what your brokerage is presenting.  In the example in the references 8937 attachment, Dr. DeSoto would be doing a Remove Shares for 50 shares of Lockheed out of his total Lockheed holdings of 600 shares.  
    2. Add Shares transaction - adding in the requisite number of Leidos shares.  This would be at the 8.2136 exchange ratio to whatever accuracy you would choose to represent it.  Again from the example, Dr. DeSoto received 8.2136 x 50 = 410.68 shares of Leidos.  An Add shares for that quantity with the original basis ($6,000) and acquisition date (July 31, 2013) would apply.
    3. Sell Shares transaction - selling the fractional share (example 0.68) of Leidos for cash-in-lieu received (example $27.33).

    Outside of the small gain/loss on the Sell Shares transaction, there should be no taxable income ramifications associated with this overall transaction.   

    At this time, I have not looked at the PG / Coty deal to see if the same general sequence would apply.  

    Post back it you have further information. If it appears the PG / Coty deal is NOT the same, please start a new question for that with further information so that discussions can be rationally followed.

     
This discussion has been closed.