Re: Unit Investment Trusts
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Posted by Dennis Kowallek on June 26, 1999 at 07:01:29:
In Reply to: Re: Unit Investment Trusts posted by Mark on June 25, 1999 at 18:58:29:
: The details of how to record this are probably the same as however the
: accounting works... If you only sell some of your original purchase, do
: the same in FM. Through whatever combinations of sells/buys you really
: go through to end up with the 11,000 shares at 1.00 each, you should enter
: just the same information. From your description it isn't quite clear to
: me how you get there though... That's what's difficult to explain. You ACTUALLY sell all the old shares (10,000
at $1.10) and buy all new shares (11,000 at $1.00) in the new series. You may
end up buying 1,100 shares at $10.00 if that's how they decided to price the new
series. In other words, the pricing of the new series has absolutely nothing
to do with that of the old series. For the purpose of cap gains, the Unit Trust
treats it AS IF you only sold the stock in the old series which DID NOT rollover
to the new series. In reality, it is much more complicated because all 10 stocks do not appreciate
equally and some selling and buying must take place to rebalance the new
series. Apparently 1999 was the 1st year you could choose to do it this way. Previously
your only choice was to treat it as a complete sale and purchase (and pay the
taxes on the $1000 cap gain). At the end of this year I should receive a
statement from the Unit Trust with the details on what to report to the IRS. Maybe UIT needs to be its own Investment Type in Fund Manager with special
rollover logic. Thanks, Dennis
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