[GNC] stock spinoff and lots

[Geoff]

Hi Michael

I assume that you want to retain the original lot so that you know the 
acquisition date associated with it when you ultimately dispose of it 
and realise a capital gain/loss?  Unfortunately I do not believe that 
the Lots functionality in GnuCash is sophisticated enough to do that. 
As a workaround you could record the original dates in the Notes field 
of the new Lots.

 >Why does that not create a capital gains transaction?
In my example the lots are closed at their original acquisition cost, so 
there is no capital gain brought to book.  The existing *unrealised* 
capital gain carries forward into the new Parent and Child Lots.


 > https://lists.gnucash.org/pipermail/gnucash-user/2012-March/044159.html

That example from 2012 is more complex than my example as it involves 
cash and a capital gain, but the Lot treatment would be essentially the 
same as mine. I would, however, use "Income:CapitalGain" instead of 
"Assets:CapitalGain".


No two spin-offs are the same, and you need to look at the tax treatment 
by the relevant regulatory authority before you can decide how to enter 
it into GnuCash.

Regards

Geoff
=====

On 30/09/2024 12:20 pm, Michael Matz wrote:
> Geoff,
> 
> Thanks for detailed example. It looks similar to a suggestion made in 
> 2012 that I had dismissed because it closes out the original lot,  which 
> I am hoping to avoid. Why does that not create a capital gains transaction?
> 
> https://lists.gnucash.org/pipermail/gnucash-user/2012-March/044159.html 
> 
> I will look into this more tomorrow, when I have GnuCash in front of me 
> again. This may be my best option but it feels like a feature is missing.
> 
> Thanks also for the mention of this investment lot report. I've read 
> about it but haven't tried it yet. That may be a good reason to upgrade.
> 
> Michael
> 
> 
> On Sun, Sep 29, 2024, 9:50 PM Geoff <cleanoutmyshed at gmail.com 
> <mailto:cleanoutmyshed at gmail.com>> wrote:
> 
>     Hi Michael
> 
>     Assuming that this spin-off has not crystallised a capital gains event
>     for you, and the reduction in the parent cost base becomes the child
>     cost base, you can do this with a single nett zero-value transaction
>     which:
>     (1) Closes out your original parent lots at original acquisition cost
>     (2) Creates new parent lots at new reduced cost
>     (3) Creates a new child lot at inherited cost which is the difference
> 
>     Then simply scrub out your lots in the Lot Editor.
> 
> 
>     To illustrate this, I have created a simple scenario where you have two
>     parent lots and the split is done on an 80% parent, 20% child basis.
>     For simplicity I have assumed that the strike price for the split is
>     $100, and the new post-split stock prices are $80 and $20.
> 
>     There are two attachments.  The first shows how to account for this
>     scenario in a spreadsheet, and the second shows how to execute it in
>     GnuCash.  The original (unrealised) capital gain is preserved but now
>     split over both of the stocks.
> 
>     Note that the new Investment Lots report may not be available to you if
>     you are running an older version of GnuCash.  This example was done on
>     Windows 10 using GnuCash v5.8 Build ID: git
>     5.8-117-g6aeca0040e+(2024-09-26)
> 
>     Hope this helps.
> 
>     Regards
> 
>     Geoff
>     =====
> 
>     On 30/09/2024 7:52 am, Michael Matz wrote:
>      > I've been using GnuCash for my personal finances for many years.
>     I've
>      > not used the stock lot feature until recently and am working
>     thought my
>      > old data and adding stock lots and capital gains transactions.
>      >
>      > How do I add a transaction to a lot, which changes the cost basis
>     but
>      > not the number of shares?
>      >
>      > In the user guide, I found a section about return of capital,
>     which says
>      > to enter a transaction in the stock account with 0 shares.
>     However, that
>      > transaction is not in the "Splits free" list in the lot editor so I
>      > can't add it to the lot.
>      >
>      >
>     https://www.gnucash.org/docs/v5/C/gnucash-guide/invest-retofcap.html
>     <https://www.gnucash.org/docs/v5/C/gnucash-guide/invest-retofcap.html>
>      >
>      > My need is slightly different, a spin-off rather than return to
>     capital,
>      > but it is essentially the same in that it changes the cost basis
>     but not
>      > the number of shares. I found this post which gets me most of the
>     way
>      > there:
>      >
>      >
>     https://lists.gnucash.org/pipermail/gnucash-user/2018-February/074963.html <https://lists.gnucash.org/pipermail/gnucash-user/2018-February/074963.html>
>      >
>      > Following this, I can create a lot and the correct capital gains
>      > transaction for the spin-off stock. However, the same issue
>     exists with
>      > the 0 share transaction for the parent company - it can't be
>     added to a
>      > lot so the cost basis for the parent stock is wrong.
>      >
>      > Am I missing something or is there no way to add a transaction to
>     a lot
>      > which changes the cost-basis but not the number of shares?
>      >
>      > Thanks,
>      >
>      > Michael
>      >
>      > GnuCash 5.4, Ubuntu
>      >
>      >
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