RIGHTS ISSUE

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broomfieldken

21 Apr, 2015 02:18 PM

Please explain how I enter a rights issue. I have been allocated x nil paid rights which I have sold. They were issue on the basis of one nil paid to one existing share.

  1. 1 Posted by Tom Freeman on 21 Apr, 2015 07:47 PM

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    I am basing this response on http://www.investopedia.com/terms/r/rightsoffering.asp

    If this is not correct please let me know.

    My understanding is the right issue allowed you to buy the security at x price. This should be entered as a buy transaction. Then the sale is a simple sell transaction. There should no no real difference from a normal buy/sell transaction.

    Tom Freeman
    Infinite Kind Support

  2. 2 Posted by Ken Broomfield on 21 Apr, 2015 08:35 PM

    Ken Broomfield's Avatar

    Thanks Tom. In another situation how do I handle a stock split? For example a company may want to issue 2 new shares for every existing one. This reduces the price of the share.

    Ken

  3. 3 Posted by dwg on 21 Apr, 2015 10:12 PM

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    In the investment account:

    1. select the "Securities Detail" button
    2. select the stock in question using the pop down
    3. select the "Stock Split" button

    enter the appropriate details

  4. 4 Posted by Tom Freeman on 01 Jul, 2015 10:16 PM

    Tom Freeman's Avatar

    DWG's advice is correct. There were some issues with the stock split functionality, mostly with data files converted from earlier version of Moneydanence, so please make sure you are using the current build of MD 2015 which you can download from here: http://infinitekind.com/preview

    The changelog for the preview builds can be seen here: http://help.infinitekind.com/kb/moneydance-2015/moneydance-2015-pre...

    Tom Freeman
    Infinite Kind Support

  5. 5 Posted by aguille on 01 Jan, 2016 03:24 PM

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    Tom

    you answer to the rights issue question does not deal with the fact that some of the original bookcost of the original shares transfers to the rights when they are issues (since they are effectively a sub division of the original holding).
    Money Dance doesn't seem to have any provision for this aspect of rights issues.
    Andy

  6. 6 Posted by Tom Freeman on 03 Jan, 2016 07:55 PM

    Tom Freeman's Avatar

    I am basing the following on this:https://www.gov.uk/guidance/capital-gains-tax-share-reorganisa...

    MD assumes the cost basis as the sum total spent on the security. From the above it seems like UK tax system uses average cost method for determining cost basis.

    Exercising your rights if on the same class of the security should mean a lowering of your average cost basis based on the discount of the rights issue. The same as if the stock price went down and your purchased at a lower price.

    But what i believe you are referring to is when the rights are for a different class of the security. In my reading of the above link you would treat the rights similar to a stock spin off as shown in this FAQ: http://help.infinitekind.com/kb/investments/how-to-account-for-a-st...

    Though cumbersome, it does adjust the cost basis of the original holdings in relation to the new holdings.

    If I am still not understanding please forgive me and any specifics you can supply would help.

    Tom Freeman
    Infinite Kind Support

  7. System closed this discussion on 03 Apr, 2016 08:00 PM.

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