[GNC] stock spinoff and lots
Michael Matz
michael.matz at gmail.com
Mon Sep 30 19:26:51 EDT 2024
Geoff,
On 9/29/24 10:48 PM, Geoff wrote:
> 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.
I want to retain the original lot because it avoids the mess of selling
and re-purchasing the original shares.
>
> >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.
>
Ah, I missed that the original lots were close at the original cost.
I've followed your example and it's working for me.
>
> > 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".
Thanks, I've been using "Income: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.
Maybe I'm not doing things "correctly", but I'm trying to enter data
into GnuCash in a why that makes sense to me, so I can create reports
for myself, not for the purposes of figuring out my taxes. For taxes, I
rely on what my broker provides and double check the numbers against
what I have GnuCash, which may involve some additionally calculations if
I didn't enter it into GnuCash the "right" way.
Thanks,
Michael
>
> 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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