Fw: Handling a Stock Spin Off

Mke C. subscribe307 at verizon.net
Tue Sep 21 19:15:36 EDT 2010


Yes, it should be the original date you made the purchase but as you say 
it doesn't matter since the spin off was over a year ago. The IRS gives 
you the potential benefit of long term gains since the spin off was 
through no action on your part.  As someone else mentioned, you might 
put something in the memo field to remind you what happened when you 
sell the SATS several years from now.
Mike

On 9/21/2010 3:25 PM, David T. wrote:
> Mike--
>
> Thanks for responding.
>
> By "original purchase date" do you mean when I originally made the purchase, or when the spin off occurred? It would look weird to make that adjustment back at the first purchase date... As for the tax implications, in this situation, the event was on 1/1/2008, and I believe that there would be no further benefit in the US to backdate any further, since long term capital gains kicks in at one year. Am I right?
>
> Thanks,
> David
>
> --- On Mon, 9/20/10, Mke C.<subscribe307 at verizon.net>  wrote:
>
> From: Mke C.<subscribe307 at verizon.net>
> Subject: Re: Fw: Handling a Stock Spin Off
> To: "David T."<sunfish62 at yahoo.com>
> Cc: "Users Gnucash"<gnucash-user at gnucash.org>
> Date: Monday, September 20, 2010, 8:22 PM
>
>
>
>
>
>
> On 9/20/2010 12:40 AM, David T. wrote:
>
>    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
>
>
> I agree with your numbers but I would add that the date of the transaction would be the original purchase date of Dish for tax purposes.  I couldn't find any way in GC to just reduce the cost basis of the stock without selling it.  If there is a way, that is the best solution.
> --------
>
>
> Mike
>
>
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