Adjusting Cost Basis after "Demerger"

mark303

In one of my non-US portfolios, the company underwent a demerger where a division was split off from the company I owned. I received 1:1 shares in a new company while retaining the shares in the original company. I now need to book the receipt of the new shares and adjust the cost basis in the old.

I can "Add shares" in the new security and record the allocated cost basis in that transaction. But how do I adjust the cost basis down in the original shares?

Tom Young

Edit: Once again I've failed to notice the "Mac" designation here.  What I've described below is how it works in the Windows version of Quicken and I can only hope Mac has the same capability.  If it doesn't then, assuming the Mac version supports both the Add - Shares Added and the Remove - Shares Removed actions, you do your calculations outside of Quicken to allocate the basis, do a Remove action for the parent company, and then go through and do a series of Add actions to get everything correctly stated for the parent and the spun-off child company.

This sounds like a "spinoff" transaction.  Knowing the names of the companies involved would be useful, to make sure that this really was a spinoff, and not something more exotic.

A spinoff is a common enough transaction that Quicken, for many years, has had a "Corporate Securities Spin-off" action that should handle this situation for you.  Make a backup of your file and then invoke the Corporate Securities Spin-off action at the appropriate date.  You'll be asked for the parent company's name, the name of the company spun off, the ratio used for the distribution of new shares and the two stock's closing price on the day of the spinoff.  The "wizard" will make all the needed entries.  You should end up with the same number of tax lots for both securities and all lots for both securities should have the same (original) date of acquisition.