How to record mutual fund "reorganization" in Q 2003

Question

A mutual fund I have has been "reorganized" into another fund. In place of the X shares I had of Fund A, I now have Y shares of Fund B. How do I record that in Quicken 2003?

It looked like the right transaction to use was a non-taxable Corporate Spin-off. I tried it and this is what happened:

It recorded a buy of Fund B on the day that I purchased Fund A. That seems right. But the cost basis is only half of what the cost basis of Fund A was.

It also recorded a Return of Capital of Fund A. But the shares of Fund A still show up in the Investing Center -- with a cost basis that is half of the original cost basis.

So the total cost basis now showing in the Investing Center is now the same as the original cost basis of Fund A. But half is now on Fund A and half is on Fund B.

Anyone know the right way to do this?

Thanks.

- Eric S.

Eric S. · Accepted Answer

I tried Corporate Aquisition. Quicken records a ShrsOut transaction for Fund A and a ShrsIn transaction for Fund B. And the cost basis and number of shares is correct in the Investing Center. But the date is the date I got the new shares. I think for correct calculation of capital gains (when I go to sell the Fund B shares) it should be the date of original purchase of Fund A. No?

Also, I did a Capital Gains report for this year and Fund A shows up in the report. Which doesn't seem right.

What do you think?

- Eric S.

danbrown · Answer

Back out (i.e., DELETE) your corp spin-off.Use a "Corporate Acquisition"

danbrown · Answer

Well, it's been a few years since I used Q03 (I'm on 05 H&B), but when I tested, it recorded the transaction in the register with a date of today ... but when I editted any one of the individual lots, it showed the ORIGINAL (i.e., correct) as-of date as the "date acquired".

So, have you edited one of the ShrsIN transactions to see what's in the dialog box?

OR, it could just be a short-coming of Q03. Perhaps someone else that's using (or has available for test purposes) Q03 can give it a try.

I'm also curious about your Capital Gains report. It was my understanding/recollection that ShrsIn and ShrsOut transactions didn't appear on a GapGn report ... because there's no money exchanged with them ... just as there's no money when you move a stock from Broker A to Broker B.

Eric S. · Answer

Well, you're right. Even though the transaction date was the date I got the new shares, the "date aquired" is the date I bought the original shares of Fund A -- shown in the edit transaction dialog box. I also checked the capital gains calculation by enter a sale of some shares of Fund B and the resulting capital gains report did show the purchase date as the (correct) original purchase date.

As for the shares of Fund A showing up on the Capital Gains report, I guess it's harmless. Because the proceeds and basis are the same, making the realized gain equal to 0.

Thanks for your help.

- Eric S.

How to record mutual fund "reorganization" in Q 2003

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