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spinoff entries date is original purchase date of parent company

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In Quicken 2017, I have two blocks of shares of a company that has done a spinoff. When I enter a spinoff transaction, Quicken generates a RtnCap and Bought transaction for each block, which is what I would expect.

What I didn't expect is that the transaction dates for these entries correspond to the original purchase dates of the parent stock, rather than the transaction date I entered into the entry form. (In this case, these dates precede the Add transactions for the parent blocks, because when I entered their Add transactions, I used the date on which the blocks were transferred into this account, while setting the purchase dates to those of the two blocks.)

Is this the expected behavior? I'm concerned, because it seems to me that the transaction date should be the actual date on which the transaction occurred (10/3/16), rather than the original purchase date (8/12/09). Why does Quicken do it this way? Would I be breaking something if I moved these transactions to 10/3/16?

I'm new to doing investments in Quicken and don't know the ins and outs. I want to be sure I'm doing this correctly.

Thanks

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Comments

q_lurker

Yes, that is the designed behavior. Why, I don't know.

Yes you can redate the four transactions. But you will also need to then do a Remove shares/Add shares pairing to get the acquisition dates of the spinoff back to the original acquisition dates - for cap gains timing purposes.

This 'flaw' is why I use Remove Shares / Add Shares from the beginning instead of the Corp Spinoff. One remove for all original shares, two adds to add in the two original lots at reduced basis, two add to add in the new shares at their basis.

Lyn Buddenhagen

Yes, that is the designed behavior. Why, I don't know.

Yes you can redate the four transactions. But you will also need to then do a Remove shares/Add shares pairing to get the acquisition dates of the spinoff back to the original acquisition dates - for cap gains timing purposes.

This 'flaw' is why I use Remove Shares / Add Shares from the beginning instead of the Corp Spinoff. One remove for all original shares, two adds to add in the two original lots at reduced basis, two add to add in the new shares at their basis.

If your security is in a taxable account (non-retirement), your acquisition date for income tax purposes IS the same as your original purchase date. This is important if you sell it within a year after the spinoff shares are issued, because you may have a lower-taxed long term gain for shares held for more than a year. I agree that having the transaction recorded on the perhaps long-distant date you acquired the original security is not ideal. This would be a really good fix to make, having a transaction date of the issue date but a tax acquisition date that equals the original security purchase. My own spinoff did not download properly from Merrill Lynch Investments BTW, but it's in an IRA so I can fudge it by using a return of capital and "buy" of the spinoff security.

q_lurker

Yes, that is the designed behavior. Why, I don't know.

Yes you can redate the four transactions. But you will also need to then do a Remove shares/Add shares pairing to get the acquisition dates of the spinoff back to the original acquisition dates - for cap gains timing purposes.

This 'flaw' is why I use Remove Shares / Add Shares from the beginning instead of the Corp Spinoff. One remove for all original shares, two adds to add in the two original lots at reduced basis, two add to add in the new shares at their basis.

If your security is in a taxable account (non-retirement), your acquisition date for income tax purposes IS the same as your original purchase date.

That is only true of the spinoff is constructed that way by the companies involved. Most are so constructed - as tax-free spinoffs. Some are not; they are considered taxable spinoffs and the new holding takes on the current date as the acquisition date. No specific spinoff was identified in this original question.

This would be a really good fix to make, having a transaction date of the issue date but a tax acquisition date that equals the original security purchase.

The Add Shares transaction provides this capability - it has both a transaction date and an acquisition date as applicable fields. It is one reason I use that transaction type as part of my spinoff records.

My own spinoff did not download properly from Merrill Lynch Investments

I always cross check downloaded transactions for these types of events. I expect the brokerages to get it "wrong". Sometimes they later correct the data (but not the prior downloads); sometimes they don't. (They do seem to be getting better at making corrections as applicable.)

it's in an IRA so I can fudge it by using a return of capital and "buy" of the spinoff security.

I treat all spinoffs the same, independent of retirement account or not. Personal choice.

Lyn Buddenhagen

Yes, that is the designed behavior. Why, I don't know.

Yes you can redate the four transactions. But you will also need to then do a Remove shares/Add shares pairing to get the acquisition dates of the spinoff back to the original acquisition dates - for cap gains timing purposes.

This 'flaw' is why I use Remove Shares / Add Shares from the beginning instead of the Corp Spinoff. One remove for all original shares, two adds to add in the two original lots at reduced basis, two add to add in the new shares at their basis.

I'm good with everything you said, lurker, except for your first comment. I was making a distinction among account types (individual or joint as examples of taxable or personal accounts, vs IRA, 401k as examples of tax-deferred/retirement accounts). For a personal account, the spinoff treatment matters for your eventual sale of the securities. The taxability of a particular spinoff is another thing entirely - it's an event, not an account type. Thanks!

q_lurker

Yes, that is the designed behavior. Why, I don't know.

Yes you can redate the four transactions. But you will also need to then do a Remove shares/Add shares pairing to get the acquisition dates of the spinoff back to the original acquisition dates - for cap gains timing purposes.

This 'flaw' is why I use Remove Shares / Add Shares from the beginning instead of the Corp Spinoff. One remove for all original shares, two adds to add in the two original lots at reduced basis, two add to add in the new shares at their basis.

@Lyn: regarding my first comment: Most spinoffs are structured the way you indicated - the spun off company shares are considered to have been acquired when the original company shares were acquired. BUT, some spinoffs are not structured that way. The newly distributed spun off company shares are treated as acquired as of the date of the spinoff. For those exceptions to the common rule, your acquisition date for income tax purposes IS NOT the same as your original purchase date. That can apply and would have ramifications in a taxable account.

You had stated that if your holding was in a taxable account, then the original purchase date applies for subsequent cap gains considerations of the spun off company. I am simply saying that is not always the case. There is another qualifier involved.

As I further indicated, I treat the spinoff the same independent of the account type. My personal choice. If the spinoff is non-taxable (the common case) I will get the acquisition date for the new shares back to the original purchase date. If the spinff is taxable (the exception), I will record the spinoff with the acquisition date equal to the spinoff date. I do that even in retirement accounts where there are no ramifications to the cap gains considerations. Consistency is a virtue (in my value system).

So I do NOT make a distinction among account types.