A Corporate Spin-Off Transaction has, I think, corrupted my data file

Question

Honeywell (HON) spun-off 1 share of Solantis (SOLS) for every 4 shares of Honeywell held.  I entered this using the Corporate Securities Spin-Off transaction in the enter transactions tool:

Sec Name: HON

New Company: SOLS

New shares issued: .25 (1:4)

After completing this entry I created an Investment  Income report.  The report had a line for _UnrlsdGain-Unrealized Gail/Loss row under income that was not there before the spin-off transaction.  I don't recoginze the amount.  When I double click on the _UnrlsdGainj amount a report opens with hundreds of transactions with Action "UnrlaG"; I don't reconginze the amounts and when I look for them in the named account I can't find them.  Clicking on any of the row amounts jumps to a row without an amount and with a Memo "Cumulative unrealized gain on spin-off of shares".

When Quicken does stuff like this I ask myself if it can be trusted.

WTF? over.

PS. I've restored a back-up from before entering the spin-off, and  "added" the spun-off shares individually from the data on my Fidelity account "Positions".

James104 · Answer

I guess I have to trust Q.  There is still an oddity to me in that the Investment Income report includes the category "_unrealizedgains", but only after the spin-off transaction does the report show an amount, and when that amount is double clicked the drill down contains unrealized gains from many securities unrelated to the spin-off.

Answering my own question "What actions does quicken perform, what calculations when I enter a Corporate Spin-Off transaction", I think the following is from Google AI:

***

In a corporate spin-off, Quicken's "Corporate Securities Spin-off" wizard performs a cost basis allocation based on the relative fair market values of the parent and new spun-off company on the effective date of the spin-off. The wizard automatically generates the necessary transactions to split the original cost basis across the original shares and the new shares received.

Quicken's actions and calculations for a spin-off:

* Cost Basis Calculation: The wizard calculates the new cost basis for each company using the following formula:

* (Parent Co. Shares × Parent FMV/Parent Co. Shares × Parent FMV + Child Co. Shares × Child FMV) × Original Parent Co. Basis

* New Spun-off Company Basis:

* (Child Co. Shares × Child FMV / Parent Co. Shares × Parent FMV + Child Co. Shares × Child FMV) × Original Parent Co. Basis

* Transaction Generation: For each lot of the original security, Quicken automatically generates the following transactions to implement the calculated cost basis allocation:

* Handling Fractional Shares: If the spin-off results in fractional shares, the wizard will initially create the fractional share. A subsequent "Sell" transaction must be manually entered to record the cash-in-lieu payment you received from your broker for the fractional share.

* Multi-Lot Holdings: For users with multiple lots of the original security, the wizard will generate a separate set of Remove Shares and Add Shares transactions for each lot to ensure the cost basis for each lot is correctly adjusted.

James104 · Answer

It would help me to know what steps the Corporate Spin-Off transaction takes.  Is there anyway to find that out?

q_lurker · Answer

You seem to have a good understanding of what I was trying to say.

I may have mis-stated about the appearance of daily unrealized gains. I seem to only get those if I customize an Investment Income report, Advanced tab, to “Include unrealized gains”.  I am not totally clear on your screen snips.

As you Added SOLS shares per the Fidelity data, did you also reduce the basis of the HON lots? If that too is important to you, I think it requires Remove Shares of those HON shares then new Add shares for the 7 lots with the reduced basis.