Trial Balance does not include amount of Return of Capital Investment splits

David T. sunfish62 at yahoo.com
Thu May 18 11:42:35 EDT 2017


I was going to say that the description sounds more like a spinoff than a split or return of capital. Spinoffs are a bitch because you have to figure out how much basis goes into the new stock, how much stays with the original stock. Add in the fact that each stock has its own value, and that there usually are fractional shares that get cashed in, and… Well, there are a lot of moving parts. Usually, the issuing agency will have a highly complex document to explain the basis and the handling of partial shares, etc.  

I’ve been able to get a spinoff to work in all its glory only with *lots* of effort.

David

> On May 18, 2017, at 4:12 PM, David Carlson <david.carlson.417 at gmail.com> wrote:
> 
> Chris,
> 
> It has been several years since I had a similar situation, but I see that
> GnuCash still has a stock split assistant (Chapter 11, I think of the
> tutorial) which helps to mash all of the parts of a split into a single
> transaction.  Did you try that?
> 
> David C
> 
> On Thu, May 18, 2017 at 3:18 AM, Chris Good <chris.good at ozemail.com.au>
> wrote:
> 
>> Hi John,
>> 
>> 
>> 
>> (Sorry about wrong abbreviation RoT I used previously when I meant RoC)
>> 
>> 
>> 
>> Thanks very much for your input. Interesting to hear about US tax law.
>> Australian tax law seems similar, at least as far as recording in GnuCash
>> is
>> concerned, but not as complicated thankfully.
>> 
>> My RoC transactions are actually to do with a stock split where the value
>> of
>> one stock is reduced, but not the no of shares, and a no of a different
>> stock are created for the same value. In my very limited, inexpert
>> investment experience, the Aust Tax Office has made a ruling shortly after
>> the split, detailing what the cost of the shares involved should be.
>> 
>> 
>> 
>> Using the RoC transaction to reduce the original shares works fine with the
>> Advanced Portfolio Rpt, but not with the Trial Balance, which makes using
>> the TB to validate the correct capital gain/loss value of other sales more
>> complicated than it should be.
>> 
>> 
>> 
>> I tried everything I could think of to add another pair of splits that
>> adjusts Equity as you suggested, but could not find anything that ends up
>> with the right figures in all accounts and a balancing Trial Balance. Could
>> you please give more detail?
>> 
>> 
>> 
>> As the RoC transaction seems to be a problem, I thought that instead of
>> doing a ROC, I would sell all the stock at cost (so there is zero
>> gain/loss)
>> and then buy all for the new cost but this comes up with a TB I don't
>> understand at all. E.g.
>> 
>> 
>> 
>> (Trading Accounts not on, and only 1 currency used, GnuCash 2.6.16, Windows
>> 10)
>> 
>> 
>> 
>> Tx 1 01/07/2016 Opening Balance
>> 
>> $1000 DR Assets:Current Assets:Bank1
>> 
>> $1000 CR Equity:Opening Balances
>> 
>> 
>> 
>> Tx 2 01/08/2016 Tfr Bank to Brokerage
>> 
>> $500 DR Assets:Investments:Brokerage1
>> 
>> $500 CR Assets:Current Assets:Bank1
>> 
>> 
>> 
>> Tx 3 02/08/2016 Buy 500 Stock1 for $1 Ea
>> 
>> $500 DR Assets:Investments:Brokerage1:Stock1 (Shares 500,  Price $1)
>> 
>> $500 CR Assets:Investments:Brokerage1
>> 
>> 
>> 
>> Tx 4 03/08/2016 Dummy Return of Capital - Sell all at Cost
>> 
>> $500 DR Assets:Current Assets:Bank1
>> 
>> $500 CR Assets:Investments:Brokerage1:Stock1 (Shares -500,  Price $1)
>> 
>> 
>> 
>> Tx 5 03/08/2016 Dummy Buy all shares at reduced cost
>> 
>> $400 DR Assets:Investments:Brokerage1:Stock1 (Shares 500, Price $0.80)
>> 
>> $400 DR Assets:Current Assets:Bank1
>> 
>> 
>> 
>> The Trial Balance as at 3/8/2016 (Commodities Price Source: Nearest in
>> Time)
>> shows:
>> 
>> 
>> 
>> $600 DR Assets:Current Assets:Bank1
>> 
>> $500 DR Assets:Investments:Brokerage1:Stock1      Expected $400
>> 
>> $1000 CR Equity:Opening Balances
>> 
>> $50 CR Unrealized Gains
>> Expected $0
>> 
>> 
>> 
>> DR Total $1,100
>> 
>> CR Total $1,050
>> 
>> 
>> 
>> Am I misunderstanding?
>> 
>> 
>> 
>> Regards, Chris Good
>> 
>> 
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