Handling partial calls

Hi, Sue.

I don't think I ever heard of a "partial call of a bond". Do you mean that the issuer called $300 of a $1,000 bond, for example? Or did they call 30 bonds of the 100 bonds that you held? Or something else?

Could you please explain just what happened?'

Remember the Golden Rule of Quicken, also known as the two-step method:

Step 1: Understand what really happened "in the real world".

Step 2: Record that in Quicken.

Trying to do Step 2 before Step 1 is almost guaranteed to make a mess. :>(

RC

I'm going to take a SWAG that one or more bonds (face value $1000 each) was called from a position that had multiple such bonds.

AG Edwards will need to provide you with the actual figures, but in general (assuming that my previous assumption was correct), I'd treat it as a sale for the call price and some additional interest received (to the call date).

db

I guess the correct terminology is a partial redemption occurred. I had a bond issued by the Nebraska Finance Investment Authority that cost $10,100.00 when I purchased it in June 2003 (100 shares @ 101). The description that was downloaded with my Feb 2006 statement from AG Edwards said it was a partial call that resulted in my receiving $5,000. I can see the $5,000 being deposited in my money market account, but the number of shares remains at 100 (I think it should only be 50). I'm completely confused as to what is happening here; does this explain it any better? Thanks!

Sue

You're right, it appears to be a "partial redemption" AKA a partial call.

The transactions to clean-up the records SHOULD appear on your March statement (well, actually they should have appeared on your February statement, but that's another story). On the March statement you should expect to see: 1) $5000 worth of bonds removed (50 shares in Quicken terminology) -- which you can treat as a sale @ $100 ... note that this WILL result in a capital loss as of the redemption date. It's a loss since you purchased these bonds at $101 and "sold" at $100. 2) There should be some interest payment for the called bonds FROM the date of the previous payment TO the date of the redemption. The exception to this would be IF the bonds were called ON the interest payment date.

If these transactions don't appear on your March statement, call and raise the roof with your broker at AG Edwards.

db

Dan - thanks for the information. I finally figured out that I needed to change the Return of Capital transaction that Quicken automatically entered to be a sale. Now my shares are correct and everything balances as it should. Thanks again for your assistance!

Sue