Hi, Bob.
You have 3 separate problems.
- Is this a taxable conversion? Unless it qualifies under some specific section of the Internal Revenue Code, an exchange of shares for substantially non-identical shares is taxable, just like a sale. Report the sale/exchange, pay your tax, then record the "purchase" of the new shares. But Vanguard's tax lawyers probably already handled the technicalities for this (check their website or all those documents they sent you to be sure - or have your tax attorney/CPA check it), so let's assume that Problem 1 is taken care of and that Corporate Acquisition is the proper treatment in this case.
- Figure out what happened in the real world. Your 6,547.334 new (Admiral) shares have a total tax basis of 4,847.86, your original Vanguard basis. No matter which arithmetic steps you go through, you should end up with this answer - to the PENNY and to the .001 share.
- Your hardest problem may be figuring out how to enter this in Quicken. :>(
Quicken has always had trouble speaking the language of Corporate Acquisitions. Q2005 STILL asks for "Price per share for acquiring company (after completion of acquisition)" - and this is absolutely irrelevant to the basis calculation. And the wonderfully helpful (NOT!) Help file explains: "Enter the share price of the parent company after the acquisition." Whether the shares (old or new) sell for $1 or $1,000, before or after the deal, the new basis of the new shares will be the same.
Problem 2 is easy IF all those old shares were in a single lot - but they probably were not. If not, then you (or your accountant) have the unenviable job of going through the simple calculation dozens of times, once for each lot of old shares. Your AVERAGE basis for your new shares is $22.77 ($334,847.86 / 6,547.334). But the basis for any one share is probably different from the average. That .4452595 conversion factor is only a convenience in calculating the number of new shares PER LOT of old shares. Exampe: If your old shares included one lot of 100 Investor shares bought for $20 per share and another lot of 200 shares bought for $50 per share, then you would have received 44.526 shares from converting the
100-share lot and 89.052 Vanguard shares for the 200 Investor shares. You would need to allocate $2,000 over the 44.526 shares, giving a basis of $44.92 per share for that lot, and allocate $10,000 / 89.052 = $112.29 per share basis for the second lot. To check your answer, multiply 44.526 x $44.92 = $2,000.11, plus 89.052 x $112.29 = $9,999.65, for a total new basis of $11,999.76 (before rounding), equal to the original bases of $2,000 + $10,000 = $12,000.
As you can see, nowhere in those calculations was current market value of either old or new shares a factor. As John Pollard said, put in the old basis (to the penny) and the number of new shares (to the .001 share) and let Quicken calculate any other numbers that it thinks it needs.
An Excel spreadsheet can help you work out the lot-by-lot bases, but there's no good way to poke them into Quicken.
As I've mentioned here often, Bob, I've been retired for over a dozen years and these tax rules change often. Be sure to check with your own tax attorney/CPA for the current rules.
RC