Reverse split stock - removed old shares leaves -0.03 in cost basis

I had a stock that did a Reverse split stock - That seems correct 1 for 10.
Then I see an entry to removed old shares - ok Number of shares now equal 0.
Then I see an entry to add new shares (new name) - correct number of shares.
Select "Holdings" and it shows a -0.03 in cost basis


How do I clear the cost basis value for 0 shares?
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Best Answer

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    Answer ✓
    I suggest you delete the Removed and the Added transactions and use the Stock Split wizard (press Ctrl + N and select Stock Split in the Enter transaction: pull-down menu) to enter the split and the Corporate Name Change wizard (press Ctrl + N and select Corporate Name Change in the Enter transaction: pull-down menu) to record the new name.

    Before making any significant change to a Quicken file, always save a backup: press Ctrl + B

Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    Answer ✓
    I suggest you delete the Removed and the Added transactions and use the Stock Split wizard (press Ctrl + N and select Stock Split in the Enter transaction: pull-down menu) to enter the split and the Corporate Name Change wizard (press Ctrl + N and select Corporate Name Change in the Enter transaction: pull-down menu) to record the new name.

    Before making any significant change to a Quicken file, always save a backup: press Ctrl + B
  • TigerJoe
    TigerJoe Member ✭✭
    Thanks for the suggestion Sherlock.
    Prior to my posting, I had tried to use the Stock Split wizard.
    I got over 50 entries purchase of the new name stock on the day of the split.
    I seemed to be closer with the downloaded stock split, name change, and add/remove stock path... only 3 cents.
    I have another stock that was liquidated, and it left a -0.01 in the Cost basis.
    So this seems to occur more than it should.
    Math is exact, so when you have 0 shares, there should be a way to clear the cost basis...
    Some transaction that only affects the cost basis to bring to zero when this type of error occurs.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    TigerJoe said:
    Thanks for the suggestion Sherlock.
    Prior to my posting, I had tried to use the Stock Split wizard.
    I got over 50 entries purchase of the new name stock on the day of the split.
    I seemed to be closer with the downloaded stock split, name change, and add/remove stock path... only 3 cents.
    I have another stock that was liquidated, and it left a -0.01 in the Cost basis.
    So this seems to occur more than it should.
    Math is exact, so when you have 0 shares, there should be a way to clear the cost basis...
    Some transaction that only affects the cost basis to bring to zero when this type of error occurs.
    The Stock Split wizard should only introduce one split transaction.
    The Corporate Name Change wizard should only introduce one reminder transaction.

    Sounds like you may not have used the appropriate wizards.

  • TigerJoe
    TigerJoe Member ✭✭
    Steps taken.

    1. Ctrl + B
    2. Removed Split/Add/Remove/Rename (download versions).
    3. Ctrl + N - select Stock Split -- Split just fine
    4. Ctrl + N - Select Corp Name change --- now I have over 50 original stock purchases with the new name, so when looking at a historical record, you will not see the old stock name in the purchase.

    I no longer have the old name in the securities list.

    Not sure if that is what I was wanting...but you are correct, the -0.03 is gone...but the number of shares that were rounded still need to be adjusted.

    Thanks for your suggestions.
    Jon
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 2021
    TigerJoe said:
    Steps taken.

    1. Ctrl + B
    2. Removed Split/Add/Remove/Rename (download versions).
    3. Ctrl + N - select Stock Split -- Split just fine
    4. Ctrl + N - Select Corp Name change --- now I have over 50 original stock purchases with the new name, so when looking at a historical record, you will not see the old stock name in the purchase.

    I no longer have the old name in the securities list.

    Not sure if that is what I was wanting...but you are correct, the -0.03 is gone...but the number of shares that were rounded still need to be adjusted.

    Thanks for your suggestions.
    Jon
    If you receive cash-in-lieu for the fractional share holding, you should enter a Sold action transaction for the fractional shares.  Note: Most financial institutions will use FIFO.
  • TigerJoe
    TigerJoe Member ✭✭
    The reverse 10-1 Stock split changed 1517.961 to 151.7951
    The number of shares was rounded up Old shares 151.7951 became New shares 152.
    maybe that is why I ended up with the negative cost basis.
    With the steps taken, I cannot tell if I have fixed the cost basis issue or not.
    As I have another stock that when completely sold left a negative basis, I tried an experiment, and entered a stock sale prior to the stock split/rename and it shows the negative .03 cost basis after the sale.

    So while I can hide the fact I have a negative cost basis, I am not solving the problem.
    So now I have at least two stocks with a negative cost basis.
    It is not large, so materially it is not significant, but it should be that zero shares of stock should have a zero cost basis, and any negative/positive should have been part of the realized gain when liquidated.
    IMHO,
    Jon
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 2021
    TigerJoe said:
    The reverse 10-1 Stock split changed 1517.961 to 151.7951
    The number of shares was rounded up Old shares 151.7951 became New shares 152.
    maybe that is why I ended up with the negative cost basis.
    With the steps taken, I cannot tell if I have fixed the cost basis issue or not.
    As I have another stock that when completely sold left a negative basis, I tried an experiment, and entered a stock sale prior to the stock split/rename and it shows the negative .03 cost basis after the sale.

    So while I can hide the fact I have a negative cost basis, I am not solving the problem.
    So now I have at least two stocks with a negative cost basis.
    It is not large, so materially it is not significant, but it should be that zero shares of stock should have a zero cost basis, and any negative/positive should have been part of the realized gain when liquidated.
    IMHO,
    Jon
    What is the name of the security that had the reverse split?
  • TigerJoe
    TigerJoe Member ✭✭
    The Security I noted in the original comment is Inventrust Properties Corp (IARE) . It has more than 10 years of history, so I have inserted an example of -0.02 cost basis for zero shares that is a shorter start to finish.
    This is a Index fund (VANG INST TOT BD MKT) where there is .an admin fees that you see charged with .001, .002 or .003 shares being sold to cover the fees.

    The point is we get to zero shares, and we have a negative cost basis, and no way to clear.

    Hence the core question.
    Jon
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    TigerJoe said:
    The Security I noted in the original comment is Inventrust Properties Corp (IARE) . It has more than 10 years of history, so I have inserted an example of -0.02 cost basis for zero shares that is a shorter start to finish.
    This is a Index fund (VANG INST TOT BD MKT) where there is .an admin fees that you see charged with .001, .002 or .003 shares being sold to cover the fees.

    The point is we get to zero shares, and we have a negative cost basis, and no way to clear.

    Hence the core question.
    Jon
    I reviewed the available documentation on the split,  If you held 1517.961 shares, you should enter a split of 152 for 1517.961.

    Note: A split or security name (or ticker symbol) change should not impact cost basis. 

    Regarding VANG INST TOT BD MKT, I suggest you reenter the last sale transaction in the account register using the Sell - Shares Sold wizard and check Sell all shares in this account.
  • TigerJoe
    TigerJoe Member ✭✭
    Steps taken
    Ctrl - B - backup
    Delete the sold last entry for VANG INST TOT BD MKT
    Ctrl - N - Sold - select sell all. Select Lots FIFO
    Check Holdings Window.
    Still $-0.02 in the Cost Basis.

    As for the IARE (*which is now listed on the NYSE as of Oct 12th by the way with a new stock symbol IVT)
    Removed the Split (10 for1) and
    CTRL-N Stock Split = put in ( 1517.961 old for 152 New) --
    Holdings view shows 152 shares

    Just to try, I did a Ctrl-N Sold - select Sell all Select Lots FIFO

    The Wizard showed 152 available to select, but when I selected Sell All, it popped up a window saying 151 was the maximum number I could select...so ok select 151, That leaves one share in holdings view.
    Change the register change to 152 - Cost Basis left with $-0.03 as before.

    So still not quite fixed.
    Tried a File Validation/Rebuild and no change.

    Thanks,
    Jon
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited October 2021
    TigerJoe said:
    Steps taken
    Ctrl - B - backup
    Delete the sold last entry for VANG INST TOT BD MKT
    Ctrl - N - Sold - select sell all. Select Lots FIFO
    Check Holdings Window.
    Still $-0.02 in the Cost Basis.

    As for the IARE (*which is now listed on the NYSE as of Oct 12th by the way with a new stock symbol IVT)
    Removed the Split (10 for1) and
    CTRL-N Stock Split = put in ( 1517.961 old for 152 New) --
    Holdings view shows 152 shares

    Just to try, I did a Ctrl-N Sold - select Sell all Select Lots FIFO

    The Wizard showed 152 available to select, but when I selected Sell All, it popped up a window saying 151 was the maximum number I could select...so ok select 151, That leaves one share in holdings view.
    Change the register change to 152 - Cost Basis left with $-0.03 as before.

    So still not quite fixed.
    Tried a File Validation/Rebuild and no change.

    Thanks,
    Jon
    When we check Sell all shares in this account, we don't need to select lots.

    Did you happen have more than one Bought/Added/Sold transaction for the same security entered on the same day in the same account register?  I find Quicken's reported cost basis of the actual lots in Holdings and the Portfolio view to be off.  It appears as if Quicken assigns the total of the cost bases to one lot and uses a negative cost basis for the other.   If all shares are sold, the sum cost basis reported on the views may be negative.  Strange...

    Regarding Sell All, it sounds like a rounding error.  You might try recalculating the investment register: open the register and press Ctrl + Shift + Z  Hopefully by the time you get around to selling the shares Quicken will have addressed the issue.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    So in summary, you had 1517.961 shares of a security with a specific cost basis.  After the reverse 1:10 split,  you then had 152 shares.  The security also changed names in some fashion becoming InvenTrust Properties with ticker IVT.  That company went public trading on the NYSE on October 12, 2021.

    Normally, I would agree that the StkSplit transaction would be most applicable in conjunction with the Corporate Name Change.  In this specific case, I would not take that path.  Reason 1 is the odd (?) approach where the split rounded up the fractional shares.  While it would seem the 152 for 1517.961 ratio should work, clearly the minutiae of the computer math within Quicken did not handle that in all modules with sufficient precision.  Reason 2 is the coincident name change and your desire to have the old name kept in the records. 

    In this case, I would then choose to do a Corporate Acquisition transaction where InventTrust (IVT) acquires the old company (IARE?) using a 0.100134 share ratio to get as close as possible to the 152 total new shares.  That Corp Acq will generate one Remove Shares removing the 1517.961 old shares and adding in on a per lot level Add Shares for the new IVT holding.  (I am assuming you had multiple lots of IARE.)  Each of those Add Shares should reflect the correct cost basis and acquisition dates of each lot so that the information would properly transfer from old holding lot to new holding lot.  I would then tweak each of those Add Shares transactions to present a consistent share quantity (as precise as you choose, perhaps 0.001 shares) that totals to the correct 152 shares.  

    Example of that tweaking -- If you had a lot of IARE of 11 shares at a basis of $23, the Corporate Acquisition as I described would generate a lot of IVT of 1.101474 shares with a basis of $23.  I would edit that Add Shares to be adding only 1.101 shares but still maintaining the $23 basis for that lot,  If needed to get to the 152 total, I might make this lot 1.102 shares, still at $23.   

    Now even with all that, the residual -0.03 cost basis may not clear.  It that remains and if it bothers you that much, I would use the Enter Transactions button, generate a Return of Capital transaction for that security, Amount = -0.03, Market Value = -0.03, TRANSFER ACCOUNT = [same as account holding the security], and the Memo indicating this is a correction of the residual cost basis.   
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    I meant to add:  I don't really know what other ramifications that RtrnCapX transaction might have on other reports and presentations.  I find it does or can clear up those penny-sized cost basis residuals as presented in the Security Details.  I find those occasionally for a variety of securities, usually when there are multiple lots and multiple sales over time.  True RtrnCap transactions such as might apply for some REIT distribution may also be a contributing complication.  I have never been able to track down any particular transaction as a source.