why does a corporate name change, change the name of the old stock from its very beginning?

Unknown
Unknown Member
edited October 2018 in Investing (Windows)
Corporate Name Change in Quicken for Windows 2015.  I did a Corporate Name Change transaction which seemed straight forward enough but, then noticed that it changed the name of the original stock (JDSU) back to my original purchase as if the stock never existed.  What is the logic in that?  It defeats the purpose of keeping dated records.

Comments

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    UNdo that Corp name change (or restore from a backup before you did it) and try a 1:1 Corp Acquisition of New Name acquiring Old Name
    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
    Why?  Because that was the programming specification.  
    The logic?  Name changes can come in several forms and users expectations and needs also vary.

    In some cases, it is not really necessary to distinguish the old name from the new.  Minnesota Mining and Manufacturing == MMM == 3M Corp. for all practical purposes.  Whether Alphabet == Google may be a users choice; some will see them as the same and not care that their original purchase of Google is now shown as buying Alphabet.  Others will want to recognize the distinction.  In still other cases, the Name Change may be cosmetic -- the user wants to change (correct) Ford to Ford Motor Comany, or vice versa.  

    The reality of the Name Change function is that the same effect is accomplished by editing the Security Detail and typing in a different name.  

    To keep the names distinct, use the Corporate Acquisition method outlined by NotACPA.  
  • Unknown
    Unknown Member
    edited May 2018

    q.lurker - thank you for the reply.  I thought about this more after I asked the question and wondered if it had to do with trading and taxes IRT long term and short term gains.  If there were a stock that you held for in excess of a year that underwent a name change and you sold right after the name change than as the program is written, it would correctly treat your profits as long term capital gains.  If the name did not change back to the date of acquisition than the program would see the sale as a short term gain.  The difference in taxes could be substantial.  Short term gains are taxed at the ordinary income rate.  Long term capital gains are taxed at a much lower rate.  Those in the 15% income tax bracket pay 0% tax on long term capital gains.  Those in the highest 39.6% income tax bracket still pay only 20% on long term capital gains. Likewise my same stock that did a name change (JDSU) did a spin-off just prior to that and I noted that the acquisition of the spin-off shares were back dated to the time of the acquisition of the original shares.  Thus, I think I now understand the logic of the programming.

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited October 2017
    Terry said:

    q.lurker - thank you for the reply.  I thought about this more after I asked the question and wondered if it had to do with trading and taxes IRT long term and short term gains.  If there were a stock that you held for in excess of a year that underwent a name change and you sold right after the name change than as the program is written, it would correctly treat your profits as long term capital gains.  If the name did not change back to the date of acquisition than the program would see the sale as a short term gain.  The difference in taxes could be substantial.  Short term gains are taxed at the ordinary income rate.  Long term capital gains are taxed at a much lower rate.  Those in the 15% income tax bracket pay 0% tax on long term capital gains.  Those in the highest 39.6% income tax bracket still pay only 20% on long term capital gains. Likewise my same stock that did a name change (JDSU) did a spin-off just prior to that and I noted that the acquisition of the spin-off shares were back dated to the time of the acquisition of the original shares.  Thus, I think I now understand the logic of the programming.

    I don't see it that way.  Let's examine the Corp Acquisition approach that does allow for the distinct names.

    I term the Corp Acquisition transaction a macro-transaction, because the process uses other more common real transactions to effect the desired result.  When you enter the Corp Acq, Quicken will generate Remove Shares and Add Shares transactions to create the effect that "New Corp" has acquired "Old Corp".  The Add Shares transaction reflect and use the number of shares, cost basis and acquisition dates associated with each "Old Corp" lot.  So the basics become

    Date 1 // Buy "Old Corp" shares == X shares @ Cost Basis 
    Date 2 // Remove "Old Corp" shares (at cost = no cap gains implication)
    Date 2 // Add Shares "New Corp" == X Shares @ Cost basis, Acq Date = Date 1
    Date 3 // Sell Shares "New Corp" == X Shares 

    The LT/ST sale cap gains will be predicated based on the original Date 1, not the name-change Date 2.  So it is possible to effect the name change keeping both distinct names and still get the tax implications correct.  

    As to your citation of the JDSU spinoff and name change, you are pointing at one of my favorite targets.  Prior to current QW2017, Quicken would back-date the spinoff transactions perhaps to get the cap gains right (perhaps for other reasons).  But in doing so, net worth and investment performance considerations were seriously (IMO) misstated.  For several years, I have suggested that users not rely on the Corporate Spinoff macro-transaction.  I have suggested instead to use a model of Remove Share / Add Shares / Add Shares to create the spinoff.  Similar to what I outlined above, this would be, in shorthand:
    Remove "Old Co" shares
    Add "Old Co" shares (with original Acq date and reduced basis)
    Add "Spinoff" shares (with original Acq date and balance of basis)
    The two Adds are per-lot.  

    That model maintains history and still gets future cap gains right.  Quicken 2017 now uses that model when the user chooses a Corporate Spinoff action.  
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    Terry,
    If your daughter gets married and changes her name from "First Middle Family" to "First Family Hubby'sFamily" is she not STILL your daughter?

    By any name, old or new, you HAVE owned it the whole time (and she's still your daughter).  The name change didn't change that.
    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 October 2017

    Terry,
    If your daughter gets married and changes her name from "First Middle Family" to "First Family Hubby'sFamily" is she not STILL your daughter?

    By any name, old or new, you HAVE owned it the whole time (and she's still your daughter).  The name change didn't change that.

    Of course she is still your daughter, but her birth certificate didn't change to her new name, nor her grade school records, nor her high school diploma, nor any other historical data. That is what I saw as the gist of the question, changing history.


    I don't think the analogy holds well (just my opinion).
  • Unknown
    Unknown Member
    edited October 2017

    q.lurker, NotACPA,

    I appreciate your advice on using the Corp Acquisition.  I see that does a much better job of reflecting what has actually transpired.  The analogy about my daughter was good for a chuckle, although q.lurker is right, her past records will not change even when her name does.  Fortunately, I have a few more years before I have to worry about my daughter getting married.  For now I will anxiously await the release of Quicken 2018 to update my room for improvement 2015 version.  Until then I shall plod along with 2015 occasionally seeking advice from sages such as you.  Thanks.

This discussion has been closed.