stock dividend

On 7/17/12, L3 communications gave as a "stock dividend" a certain
number of shares of Engility.
How does one enter this transaction in Quicken Deluxe?
I entered it as "shares added" of Engility with the memo saying
"received as split from L3 Communications".
Is there a better way to enter this in Quicken?
Thanks.
Reply to
Jeff
On 7/17/12, L3 communications gave as a "stock dividend" a certain number of shares of Engility.
How does one enter this transaction in Quicken Deluxe?
I entered it as "shares added" of Engility with the memo saying "received as split from L3 Communications".
Is there a better way to enter this in Quicken? -----------------------------------------------------------
If you use the "Enter Transactions" button in the investment account, you should see a "Div-Stock Dividend (non cash)" transaction.
Reply to
John Pollard
Don't know. That's why I asked. Engility is a different stock than the L3 that gave it.
How transaction wise should it be entered in Q?
If I enter "interest re-invested" as a transaction type, what do I enter as Security income? Engility or L3? The result or the source of the re-invested income?
Reply to
Jeff
Don't know. That's why I asked. Engility is a different stock than the L3 that gave it.
How transaction wise should it be entered in Q?
If I enter "interest re-invested" as a transaction type, what do I enter as Security income? Engility or L3? The result or the source of the re-invested income? -------------------------------------------------------------
I suggest you start by looking at the website (or in your printed statement) to see how the financial institution where you have your holdings, accounted for this.
If that doesn't help, I'd check with the company giving the "stock dividend".
Reply to
John Pollard
Oops. Sorry; I read that and then immediately answered a different question from the one you asked.
Reply to
Bert
"John Pollard" wrote
If you use the "Enter Transactions" button in the investment account, you should see a "Div-Stock Dividend (non cash)" transaction. --------------------------------------------------------
Sorry, it seems I too misread your original post.
Reply to
John Pollard
Thanks for all the suggestions.
I think I will just leave it the way I originally did. The memo would explain what happened should I need to know.
Jeff
Reply to
Jeff
Hi, Jeff.
No, you didn't get a "stock dividend", as that term is commonly used. You received Engility shares in a "spin-off" of assets from L-3 Communications. In a stock dividend, you start with shares of Company A and end up with more shares of Company A. In a spin-off, you end up with the original number of shares of Company A, plus some number of shares of Company B. After a stock dividend, your total basis remains the same, but divided by a larger number of shares, so your per-share basis is smaller.
After a spin-off, your original basis in Company A is split between your shares of A and B, based on the fair market value (FMV) of the two bundles of shares you end up with.
I found this description of the transaction here:
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The main paragraph says:
So, if you started with 600 shares of L-3, you should now still have those 600 shares of L-3, plus 100 shares of Engility. If your original shares cost you $60,000, then your TOTAL cost of your 600 L-3 plus 100 Engility shares is still $60,000. How much of your basis should be allocated to each? To answer that, figure out how much your 600 L-3 shares were worth IMMEDIATELY AFTER the spin-off, and how much your 100 Engility shares were worth at that same time. Divide your $60,000 between the L-3 pot and the Engility pot, then divide each pot by the number of shares in that pot. Most likely, someone has already determined the per-share FMV after the spin-off, but I haven't looked that up.
You didn't say which version of Quicken you are using, but in Quicken 2013 Deluxe, in an Investment Account register, click Enter Transactions and then Corporate Securities Spin-Off. Fill in the boxes as indicated, except that where it asks for "Cost" of old and new shares, enter the FMV of each immediately after the transaction. And do NOT check the box that says "This is a taxable spinoff". As explained in the quoted paragraph, the transactions was "structured to qualify as a tax-free distribution". ("Tax-deferred" would be a better description, since any gain - or loss - that you don't recognize now will be reflected in your eventual sale of L-3 and EGL shares.)
As I often remind readers, I've been retired for well over 20 years and tax rules change on a daily basis, so be sure to check with your own CPA for current advice on these matters.
RC -- -- -- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) snipped-for-privacy@grandecom.net Microsoft Windows MVP (2002-2010) (Using Quicken Deluxe 2013 R 10 and Windows Live Mail in Win8 x64)
On 7/17/12, L3 communications gave as a "stock dividend" a certain number of shares of Engility.
How does one enter this transaction in Quicken Deluxe?
I entered it as "shares added" of Engility with the memo saying "received as split from L3 Communications".
Is there a better way to enter this in Quicken?
Thanks.
Reply to
R. C. White
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Thank you very much RC. I really appreciate it and your taking the time to explain so well.
Jeff
Reply to
Jeff

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