Re: Ford/Visteon Spin-off
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Posted by Dennis Kowallek on July 02, 2000 at 06:04:17:
In Reply to: Re: Ford/Visteon Spin-off posted by Mark on July 01, 2000 at 20:22:12:
: : : Figure out your tax basis in Ford prior to the distribution by recording
: : : a closing price equal to the average of the high and low for that 6/28/00, not
: : : the closing price. Use the "Tax Basis FIFO (end)" or "Tax Basis AVG (end)"
: : : fields in the custom report to do this. Set your ending report date to
: : : 6/28/00. Now that you know your pre-distribution basis, multiply this
: : : by 3.93% to determine the amount of the distribution. As described on the
: : : Spin.html page you would then record a return of capital distribution in
: : : Ford for this amount, and a purchase of Visteon for this amount and
: : : the appropriate number of shares (.130933 * # of Ford shares owned).
: : Now I'm really confused.
: : Isn't my pre-distribution tax basis the same as what I paid the Ford
: : stock? For example if I bought 100 shares at $30/share with
: : a commision of $50, my pre-distribution tax basis is $3050 ... correct?
: : After the spin-off, I'll have 13.0933 shares of Visteon. Shouldn't the basis
: : for these shares be $3050 * 3.93% or $119.865? Isn't this also the amount I
: : should enter as a "return of capital" for the Ford stock?
: Yes. Yes.
: : Does this make any sense?
: Yes, this is what I was trying to say above, maybe not too clearly...
: If your buy situation is simple, like your example, it is easy. The
: purpose of using the custom report with the "Tax Basis" fields is to
: figure this $3050 number out, which can be complicated if you have many
Now that I reread your original reply, I agree. It might be helpful
if you reworded the spin.html example. You refer to $147 of Tricon stock. Maybe
it would help if you explained where the $147 number came from. In the example,
it was not clear that it was the basis for the Tricon stock.
Also, as stated in another message on this board, you might want to mention
that you probably want to make the spin-off's purchase date the same as that of
the parent company.