Can someone help with this particular type of dividend?

Question

Can someone help with the following please.  I own shares of FAT, and they recently issued a special type of dividend.  For each share of FAT owned you received .23 (approximate) shares of FATBP.

I have my E-trade account setup for automatic downloads, but it didn't download it correctly.  I also use Webull for a cash account and those have to be entered manually.  What I ended up doing in both cases was entering the dollar amount of the FATBP shares that was received, as a cash dividend for FAT.  I then made an entry showing that I purchased the shares of FATBP for that same amount per share.

That doesn't seem to be a good solution though because when you look at the gains/losses for FAT it is not taking the "cash dividend" that was entered into account.  In fact I'm not finding that cash dividend anywhere in the report for gains/losses.

There will also be a smaller (real) cash amount paid probably next week for any fractional shares that resulted from the dividend.  How should this be entered since entering a cash dividend doesn't seem to work.  TY

q_lurker · Answer

The Corporate Spinoff option will work OK for a single lot holding, but not if you held multiple lots of FAT.  The problem is in the RtrnCap transaction the spinoff wizard uses.

My current preference:* Remove Shares of parent (FAT)
* Add Shares of parent (FAT) - by lot, with original acquisition dates and basis reduced from the original by the amount that transfers to the spinoff (FATPB)
* Add Shares of the spinoff (FATPB) - by lot including fractions with original acquisition dates and the basis that transferred from the parent.
* A MiscIncX transaction with the parent (FATPB) paying the fair market value of the spinoff (FATPB) including fractional shares on the date of the spinoff.  The 'X' transfer account should be the same as the one getting these entries.  This transaction is necessary to have the Investment Performance Report and other related calculations properly balance the amounts removed (returned) and the amounts added (invested).  The spinoff wizard also generates this transaction.  This MIscIncX transaction will not alter the cash balance in the account.     
* Finally, Sell fractional share of spinoff (FATPB) for cash-in-lieu amount received.  You might date this to the date the CIL is received.

The spinoff wizard generates the 3rd and 4th bullet-point transactions correctly but will have difference with the basis of the parent lots.

I did this sequence in September for a two-lot holding that similarly spun-off a set of preferred shares.

To my knowledge (and I am not a tax or financial guru), this is not a taxable event even though it is termed a 'dividend'.  In my case, the parent also issued a cash dividend at about the same time.

JusMeJim · Answer

Year: 2020
 Version: R30.14
 Build: 27.1.30.14

NotACPA · Answer

The Subscription version of Q is STILL a desktop program.  There are a couple of web-based add-on's available ("Quicken on the Web" and "Quicken Mobile") but they're entirely optional and have been known to cause various problems.Again, please  go to HELP,  About Quicken and (from there)  tell us the Q product and BUILD of that product  you're running.