Fw: Handling a Stock Spin Off

[David T.]

I have tried what I proposed, and ended up doing something slightly different. I am still not sure it's right. Here is what I ended up with:

Sell 200 DISH @ original cost (reducing cost basis to 0)
Buy  200 DISH @ 82% * original cost (setting basis at 82% of original)
Buy   40 SATS @ $1.82 (setting SATS basis at 18% of original basis)

This sequence results in the cost basis remaining the same, although it does not set the SATS transaction at the company's share price of $35. 

Again I ask: did I do this right?

TIA,
David

--- On Fri, 9/17/10, David T. <sunfish62 at yahoo.com> wrote:

> From: David T. <sunfish62 at yahoo.com>
> Subject: Fw: Handling a Stock Spin Off
> To: "Users Gnucash" <gnucash-user at gnucash.org>
> Date: Friday, September 17, 2010, 5:16 PM
> Any comments? 
> 
> --- On Tue, 9/14/10, David T. <sunfish62 at yahoo.com>
> wrote:
> 
> > From: David T. <sunfish62 at yahoo.com>
> > Subject: Handling a Stock Spin Off
> > To: "Users Gnucash" <gnucash-user at gnucash.org>
> > Date: Tuesday, September 14, 2010, 1:22 PM
> > I am trying to get my brain around
> > the transactions and splits needed to track a stock
> spin
> > off. Back in January of 2008 (how ever did I miss it
> for so
> > long!), DISH spun off SATS 5 to 1 (that is, for every
> share
> > of DISH, I received .2 shares of SATS). According to
> one
> > site I found, these are the data points I need to
> consider:
> > 
> > 1. Spinoff date - 1/1/2008
> > 2. Parent company - EchoStar Communications
> Corporation
> > [DISH]
> > 3. Remaining basis percentage of Parent Company,
> [DISH] -
> > 82.5610.
> > 4. Number of shares held in parent company - 200.
> > 5. Daughter company - EchoStar Holding Corporation
> [SATS]
> > 6. Number of shares of SATS received - 40.
> > 7. Price per share of daughter company - $35.
> > 
> > I am not entirely sure how I should be tracking this
> in
> > GnuCash. A MoneyDance forum gives the following
> > (MoneyDance-centric) set of instructions:
> > 
> > 1, Leave the original purchase entry alone
> > 2, Do a SellXfr of the original shares at $0 dollar
> amount
> > (I created a special category "Stock Spinoff" to
> account for
> > the double-entry required)
> > 3, Do a BuyXfr to record acquiring the new parent
> shares at
> > the published adjust cost basis (as per company press
> > release) of the original share price on the spin-off
> date
> > 4, Do a BuyXfr to record acquiring the new child
> shares at
> > the published adjust cost basis (as per company press
> > release) of the original share price on the spin-off
> date
> > 
> > What I *think* all this means is:
> > Sell 200 DISH @ $0 to Equity:Asset Cost
> > Buy 200 DISH @ .82561 * 2.09635 [my orig purch price]
> from
> > Equity:Asset Cost
> > Buy 40 SATS @ $35 from Equity:Asset Cost
> > 
> > FYI: Equity:Asset Cost is the account that the shares
> came
> > from originally.
> > 
> > Is this correct?
> > 
> > Thanks,
> > David
> > 
> > 
> >       
> > 
> 
> 
>       
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>