Spin-offs [again]

[cbenenax]

Sorry, but I have read the documentation and several entries on the board and I still can't make this work.

BEP spun off BEPC. They did it with the equivalent of a 5-for-4 stock split, with all the new shares in BEPC. This is a tax-free transaction. It's only purpose was to create standard C-Corp shares (BEPC) each of which will receive dividends equivalent to a unit in the original MLP (BEP).

THe original shares were bought in a single transaction. I entered 1/5 of the total cost of that transaction (minus various ROC distributions) as the cost basis of the new shares. I expected the Ave. purchase price of all shares (BEP and BEPC) to now be the same, namely the total cost basis divided by the total number of BEP and BEPC shares. The value shown in my report is as expected (24.04) for the new shares, but the cost of the old (BEP) shares was not adjusted (is still 30.96).

The transactions added by the wizard for BEP are:

BEP transactions

ScreenHunter_272 Aug. 03 13.12.jpg (11.49 KiB) Viewed 1714 times

For BEPC:

BEPC transactions

ScreenHunter_272 Aug. 03 13.14.jpg (8.38 KiB) Viewed 1714 times

[Mark]

Hi cbenenax,

Do you still have BEP, or did this just convert all BEP shares to BEPC? If you don't have BEP anymore, you don't need to use the spin-off wizard. On the date of the spin-off just record a split with a ratio of 5 for 4, and change the name/symbol/CUSIP as appropriate.

[cbenenax]

I received 1 new share of BEPC for every 4 of BEP I hold. I still have the same number of shares of BEP as before. The price (and presumably the cost basis) of all shares went down to leave the capitalization unchanged.

[Mark]

In this case, yes, you do need to use the spin-off wizard. Your tax cost basis in BEP will be reduced by the amount of the Return of Capital distribution ($6911.60). What field were you looking at where the BEP cost basis was not being adjusted?

[cbenenax]

Avg purchase price-C in reports:

ScreenHunter_272 Aug. 03 17.58.jpg (8.12 KiB) Viewed 1707 times

[Mark]

That is a simple average of what you paid for each share currently owned. It isn't a tax basis, and isn't reduced by the Return of Capital distribution. To see your tax basis per share (which is reduced by the RofC distribution), see the field:

Tax basis per share, Assigned Method

[cbenenax]

Yes, that did it. Thanks