Adding securities...
A company I invested in just spun off into two companies. How can I add the stock information of the new company? I can't use "Misc income"....there isn't any account for the "buy"...no transfer. Just a split and "Free" from my perspective. If I put in "buy" there must be a dollar value but this is misleading.
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1 Posted by -Kevin N. on 20 Sep, 2018 02:46 AM
Hi dhewko2009,
See if this Moneydance KB article helps any:
http://help.infinitekind.com/kb/investment-accounts/stock-spinoff
-Kevin N. (not a member of MD support)
2 Posted by dwg on 20 Sep, 2018 03:07 AM
I'm a fellow user.
I understand what you mean by "free". But there is no such thing as a free lunch. :) The transaction needs to be properly accounted for because it will affect you in either the short or the long term, and at least in my neck of the woods the tax authorities are not known for taking a kind view to being creative.
A spin off needs to be funded in some way from the companies accounts, but there are multiple methods that can be used. One way is for the company to "pay" a dividend which is then compulsory used to acquire the shares in the spinoff, you get no choice in this. Another method is for the company to use a Return of Capital transaction and that is used to acquire the new shares.
These two methods are at the opposite ends of the spectrum in terms of their effect on you.
What you really need to find out is how the spin off was funded, without that knowledge it is impossible to determine the correct approach to take.
3 Posted by dhewko2009 on 20 Sep, 2018 09:25 AM
Thanks, I do know what you are saying but I couldn't think of a simple way to say it. I didn't pay any money for the new company. The orginal company did a spinoff of assets so I guess, labelling it a dividend is valid. The new company had an IPO price so I can use that for the value... good idea! The orginal company doesn't give conventional dividends (focus on shareholder value) so I didn't even think of that....
Now my only remaining issue is to get the new security to be updated. Spent an hour trying but it's my problem and I usually have issues getting the quotes to download. But yesterday was the first day of trading so it may not have been in AlphaAdvantage yet....
4 Posted by dwg on 20 Sep, 2018 09:56 AM
The company should somewhere state how the transaction was structured
System closed this discussion on 20 Dec, 2018 10:00 AM.