Return of Capital (specifically a spin-off)

Bob B's Avatar

Bob B

18 Sep, 2021 04:51 PM

I think I have a workable work-around for the lack of Return of Capital for a spin-off type transaction that does not generate a capital gains and keeps the history intact.

This works when the cost basis is averaged (not for lot based).

On the date of the spin-off, create a sell tx for the original company, make the shares sold = 0 and add a FEE (I created a category for this 'spin-off' for the tx equal to the amount of the return of capital. This reduces the cost basis of the original stock without affecting history or creating a capital gains.

For the new spin-off company, create a buyXrf tx and buy the correct number of shares and transfer the full amount of the FEE above. This creates the new stock with the correct valuation and cost basis.

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