Corporate Securities Spin-off

Can I reverse a Corporate Securities Spin-off? If so, How?

Any help appreciated.

Phil B.

Reply to
Phil
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Hi, Phil.

What???

That seems a very strange questions. Exactly what do you mean?

Would it work to simply delete the entry for the spin-off transaction? Or is your situation more involved than that?

Please post back with details and maybe we can suggest something more elaborate that might work for you.

RC

Reply to
R. C. White

RC,

Seems that the spin-off entry has fouled up the value of the original security as well as the spin-off security. I must have done something wrong. Prices are correct.

For some reason I can't find the spin-off transaction. Any help appreciated. Thanks.

Phil B.

Reply to
Phil

Hi, Phil.

Please tell us the version of Quicken that you are using. It wouldn't hurt to also mention your version of Windows.

And then tell us when the spin-off happened and when you made the entry. What entry did you make? The name of the companies involved would probably also be helpful. Some of us may already be familiar with the transaction; if not, we can look it up. A link to the company's website would probably go a long way to help us understand and to help you understand it, too. The number of shares might be important.

You are giving me the very queasy feeling of having come into the middle of the movie, with no idea of how we got to this point. :>( It seems that you are trying to get maximum help with minimal disclosure. We can't help you if we don't really know what the problem is, and you have not done a good job of explaining it in your first two messages. My first reply asked for details, but your second post gave us none at all. We don't even know if this is a public company or your family corporation. We don't know if the spin-of happened in 2006 or 1996.

Remember the two-step process for recording any transaction:

Step 1: Understand what happened in the real world.

Step 2: Record what happened.

Trying to do the second step before the first is almost guaranteed to require that you back up, undo what you did wrong, and start over.

RC

Reply to
R. C. White

RC,

Using Win Xp SP 2 with all updates Quicken Deluxe 2006 with all updates Spin-off was effective Jan 2, 2007 but since the market was closed (Pres.Ford funeral) it went into effect on Jan 3rd.

Corporate Securities spin-off entry made Duke Energy (Original security) Spectra Energy (Spin Off Security) .5 shares issued per old share $20 opening price of old shares (post spin-off) $28.25 cost per new share

Held 362 shares of Duke Energy

Don't understand how you can say I am trying to get maximum help with minimal disclosure since all I asked in my first post was: "Can I reverse a Corporate Securities Spin-off? If so, How?"

Also I think I understand what happens in the real world when a Corporate Securities Spin-off is effective since I spent over 30 years in the brokerage business. My problem is understanding what Quicken does.

Hope this helps.

Phil B.

Reply to
Phil

Hi, Phil.

Thanks for those details.

Now we know this is the Duke/Spectra spin-off that we discussed at some length last week. See the thread starting with Nemo's post on 1/4/07, Subject: Spectra spin-off/

As John Pollard pointed out, Quicken treats a spin-off as a Return of Capital, plus purchase of the new securities. As a broker, you know this is NOT correct, but that is the way Q handles it. (John and I had a spirited discussion of this a year or two ago, as I recall. As usual, he was right.)

John is also right about the difficulty of reversing the multiple wrong entries and entering the proper ones. Since the transaction happened so recently, your best bet might be to restore your latest backup before you posted the transaction and enter it correctly. (Quicken's latest automatic backup in your \QuickenW\BACKUP folder should be less than a week old.) This means also entering all your other recent activity, too, of course. Depending on how complex your Quicken file is, you might want to use a QIF file to export from that backup only the Account that holds your Duke shares, then reload your up-to-date QDF file, delete that Account, import the QIF file, then make the correct spin-off entry. Neither is a perfect solution, but either should work, with some effort.

Also I think I understand what happens in the real world when a

Sorry if I seemed to be talking down to you. When our only clue is your first name, we don't know who we are talking to, so we often have to address the "lowest common denominator". And I agree that figuring out Quicken is often harder than using pencil and paper.

RC

Reply to
R. C. White

A Quicken "Corporate Securities Spin-off" transaction is really a pseudo-transaction; no such transaction ever appears in your Quicken account register (Transaction List in new Quicken versions).

The Quicken Corporate Securities Spin-off transaction generates a bunch of other Quicken transactions: namely, return of capital and buy transactions ... one of each for each lot you own of the company doing the spinning-off. There's a return of capital for the spinning off company, and a buy transaction for the spun-off company ... a pair for each lot of the spinning-off company that you owned when you entered the spin-off.

To reverse a Quicken corporate spinoff, I think you must delete all those generated transactions. No problem if you only owned one lot of the original company when you entered the spin-off transaction ... something of a pain if you owned many lots at that time.

Also, if you intend on re-entering the spin-off transaction, you will probably have to delete the Quicken security for the new company, since I don't think Quicken will let you spin-off a company that already "exists".

Reply to
John Pollard

Whoops! Spell checker couldn't catch this one...

Your original basis for 362 shares of DUK would now be spread over the same

RC

Reply to
R. C. White

Hi RC,

Thanks for pointing me to the Spectra Energy posts in this newsgroup. Lots of good info there.

Prices I used were the opening prices on 1-03-07 since the Corporate Securities Spin-off transaction asks for the post spin-off price. As you said it probably won't make that much of a difference tax wise.

When I value my portfolio as of 12-29-06 Quicken has the 362 shares of Duke Energy with the 12-29 closing price of $33.21 which is correct but it also shows 181 shares of Spectra Energy with a price of $18.31 which is the basis price calculated by Quicken which is incorrect. Messes up the portfolio valuation and inflates the unrealized capital gains as of the end of 2006.

Not a big problem now that I understand the error in Quicken.

Thanks for your help and patience

Phil B.

Reply to
Phil

Hi, Phil.

Yes, this is what I meant by my poorly-worded paragraph in the Nemo thread:

"As John Pollard points out, Quicken's handling of this is not retroactive. If you look at your Portfolio in Quicken for a date when you help DUK prior to the spin-off, you will see SE shares that you did not actually hold at that time. I'm not sure how to handle this, except to recognize that it happens and adjust for it."

If you bought DUK on 1/1/05, for example, then record the spin-off on

1/2/07, and then ask for any kind of portfolio or net worth report for any date from 1/1/05 to 1/2/07, Quicken will show those 181 "ghost shares" of SE - which is wrong. I've never had to actually deal with the problem, but my first impression is that you could correct the error by hiding the SE shares or setting their historical value on that date to zero. Presumably, the 362 shares of DUK would be shown correctly at their correct price. If you confirm (or disprove) that, please let us all know.

So, did you have to use one of the long-way fixes that John and I worried about, or did you find a short-cut?

RC

Reply to
R. C. White

R.C.,

Took a short cut by pricing Spectra Energy at .01 and Duke at $33.21 for the 12/29/06 closing price. Quicken wont let you price anything at .00. Just have to remember this if I ever need a valuation prior to 12/29/06.

Again, thanks for your help.

Phil B.

Reply to
Phil

One can circumvent Quicken's anti ZERO policy by using .0000001 for prices when required.

Reply to
sharx35

Thanks for the info.

Reply to
Phil

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