Hi, Doug.
Step 1: Find out what happened in The Real World.
Step 2: Record this in Quicken.
Trying to do Step 2 before Step 1 will get us in trouble every time.
Usually, the best way to find out what happened in these situations is to go to the Investor Relations page on the company's website. At
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under About Cypress | Investor Relations there is a heading "Spin-Off of SunPower Stock" with a link to "Tax Basis Information". That takes us to
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a 4-page explanation of what happened, including a worksheet for Tax Basis Allocation to allocate your original Cypress basis between your Cypress shares and your new SunPower shares. There is also this paragraph: "Cypress received a private letter ruling from the Internal Revenue Service that the Distribution of SunPower Class B common stock qualifies as a tax-free distribution for U.S. Federal income tax purposes. As a result, you generally will not recognize gain or loss for U.S. Federal income tax purposes on the receipt of SunPower Class B common stock except with respect to the excess of cash received in lieu of any fractional share of SunPower Class B stock over the basis allocable to such fractional share, which shall be treated as capital gain from the sale of such fractional share."
OK. That's Step 1. Now to Step 2.
It's easy to figure out this transaction using pencil and paper. But Quicken's Corporate Securities Spin-off wizard has been misleading for several years - and the 2009 Deluxe version that I'm using now is no better - perhaps worse. Pressing F1 brings up the Help file for that wizard, but the language here is cloudy - and wrong. :>(
I haven't had occasion to use this spin-off wizard in several years, Doug, except to try to answer other users' questions. But here is how I THINK you should record the transaction. For convenience, I'll use their example of
100 Cypress shares that cost you $20 per share.
In the Quicken Enter Transaction screen, choose Corporate Securities Spin-off and enter: Transaction Date: 9/29/08 Security Name: Cypress Semiconductor (or whatever name you are using in Quicken) New Company: SunPower Class B (or whatever name you want to call it in your files) New shares issued ___ per old share: 0.27427234997709 (feel free to round this - to .274272, for example) Cost per old share ___ (post spin-off): THIS is where Quicken's terminology is just flat WRONG and it has not been wrong for years! :>( "Cost post spin-off" is what we are trying to determine. What you need to enter here is FMV (Fair Market Value) of the Cypress shares immediately after the SunPower shares have been spun off. As Cypress' worksheet explains, this was determined to be $5.22 per share, and this is what you should enter where Quicken incorrectly asks for the "cost". Cost per new share: This also should be FMV of your new SunPower shares: $69.05, per the Cypress worksheet.
Note that you don't actually enter the cost of either Cypress or SunPower here. Quicken already knows your old basis in Cypress and will calculate your new bases in both issues.
Then click Enter/Done and let Quicken calculate your new basis in the old and new shares and update your portfolio to record your new SunPower shares. Note that the acquisition date of SunPower will be the same as for your Cypress shares. This is the correct treatment for a "tax-free transaction", since the Internal Revenue Code "tacks on" the holding period of our original shares to determine the holding period of the new shares you received.
As a test, make sure the sum of your basis in Cypress and SunPower on 9/30 is the same as your basis in Cypress on 9/29. All you have done is take that total basis and allocate it between the old and new holdings.
Sorry to make this explanation so long, and probably in more detail than you need. But others will be "reading over our shoulders" and maybe the fuller explanation will head off some of their questions.
I've been retired for nearly 20 years, Doug, and these rules can change daily, so be sure to consult your own CPA to be sure that these rules still apply.
RC