Entering stock transactions
cedayiv at gmail.com
Mon Sep 8 12:37:35 EDT 2008
On Mon, Sep 8, 2008 at 1:20 AM, Fred Bone <Fred.Bone at dial.pipex.com> wrote:
> I'm struggling to work out how to enter some complex stock transactions.
> Can anyone help? Note that I'm not looking for "accountancy" or "tax"
> advice; I'm trying to work out how to satisfy the balancing rules (and so
> prevent spurious trial-balance errors).
> This example is probably as good as any:
> I bought 225 UU for 1473.59 plus 19.87 total dealing costs. So far so
> Subsequently there was a capital reorganisation.
> 17 new "A" shares for every 22 old, plus a 1-for-1 issue of "B" shares,
> redeemable at 1.70 each.
> So I received
> 173 (= 225*17/22) new "A" shares, plus
> 6.13 in cash for the odd 19/22 of a share, plus
> 382.50 (= 225*1.70) in cash on redeeming the "B" shares.
> (There are no dealing costs).
> I initially entered this transaction using the "Stock Split" Wizard, and
> it shows as a "Split" of -52 shares, with two "Sell" splits, one of
> 382.50 and the other of 6.13, and one "Buy" split of 388.63 Capital
> Is this "the GnuCash way" to do it? Or should I work out the implied
> value of a share (given that 19/22 was worth 6.13, that's 7.098 per
> share) and treat it as two transactions: a sale of the original 225 (for
> 225*7.098 = 1597.05) and a purchase of 173 (for 1597.05 - 388.63 =
> 1208.42, implying a price of 6.9851)? In the latter case would it be
> better to close off the register and start another with the "second
It seems like you have two steps here:
1. 225 share UU -----> 173 "A" + 225 "B" + 6.13 cash
2. Sell 225 "B" @ 1.70 per share
However, the stock split druid doesn't know how to handle situations where
one share of old stock gets split into two different new stocks. So I'm not
sure the stock split druid is much help.
Did you receive any information about the reorganisation telling you about
treatment of basis, cash, or capital gains? What portion of the basis
(1473.59 plus 19.87) goes to "A" shares and what portion goes to "B" shares?
You need to know the basis of the "B" shares to figure the capital gains on
redeeming them. Is any of the cash considered a return of capital rather
than a capital gain?
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