How do I enter an "EXCHANGE" of Stock in Quicken?

Discussion in 'Quicken' started by Ira, Jul 4, 2007.

  1. Ira

    Ira Guest

    Greets,

    Does anyone know how to enter in an exchange of mutual fund ABC for
    mutual XYZ? Its not a "corporate acquisition" or "corporate name
    change", since its occuring in mutual funds, but I dont want to lose
    the basis of all the dividend reinvestments simply by issuing a sell
    and a buy.

    Any help is greatly appreciated.

    Thanks!
     
    Ira, Jul 4, 2007
    #1
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  2. Ira

    Fred Smith Guest

    Even though it's a mutual fund, a corporate acquisition should work. Unless, of
    course, you have the fund in a "single mutual fund" account.

    Regardless, just renaming the fund should achieve what you want.

    --
    Regards,
    Fred


    "Ira" <> wrote in message
    news:...
    > Greets,
    >
    > Does anyone know how to enter in an exchange of mutual fund ABC for
    > mutual XYZ? Its not a "corporate acquisition" or "corporate name
    > change", since its occuring in mutual funds, but I dont want to lose
    > the basis of all the dividend reinvestments simply by issuing a sell
    > and a buy.
    >
    > Any help is greatly appreciated.
    >
    > Thanks!
     
    Fred Smith, Jul 4, 2007
    #2
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  3. Ira

    dllapides Guest

    I agree with Fred's 1st answer -- Corporate Acquisition (stock for
    stock)

    This is the best way to haave accurate reports, showing that you hold
    ABC until MM-DD-YYYY and then hold XYZ thereafter. (Actually, the
    reports will treat the transaction as occuring at the open of MM-DD-
    YYYY.) And it preserves the basis of each lot (purchase, dividend
    rreinvestment or capital gain reinvestment).

    Please note that this will generate a lot of transactions -- 1 Remove
    ABC transaction and a proliferation of Add XYZ transactions, 1 Add for
    ever purchase, dividend reinvestment and capital gains reinvestment
    you have had over the years.

    Fred's 2nd answer -- change the fund's name --is simplest, but it
    results in your reports showing that you owned XYZ at a time when you
    actually did not.

    -dll
     
    dllapides, Jul 4, 2007
    #3
  4. Ira

    JM Guest

    On Jul 3, 5:49 pm, Ira <> wrote:
    > Greets,
    >
    > Does anyone know how to enter in an exchange of mutual fund ABC for
    > mutual XYZ? Its not a "corporate acquisition" or "corporate name
    > change", since its occuring in mutual funds, but I dont want to lose
    > the basis of all the dividend reinvestments simply by issuing a sell
    > and a buy.
    >
    > Any help is greatly appreciated.
    >
    > Thanks!


    I think you need to provide more information before anyone can give
    you a correct answer.

    What exactly do you mean by "EXCHANGE"?
    Did you [or your broker] initiate this transaction? - reallocation or
    other reason?
    Was this in a taxable or a tax deferred account? - possibly a tax-
    exempt fund?

    If this was a true Sell/Buy sequence, then that is what you enter in
    QW.
    The cost basis in the new fund, XYZ, is what you paid for it -
    period!!
    You would likely have capital gains/losses in a Sell/Buy sequence.

    Proper accounting for cap gains/losses is critical if this was a
    taxable event - perhaps not critical if a non-taxable event.
     
    JM, Jul 4, 2007
    #4
  5. Ira

    R. C. White Guest

    Hi, Ira.

    As JM said, we need a lot more information before we can give an intelligent
    answer.

    First, the Internal Revenue Code taxes gains on "sales and exchanges". In
    other words, an exchange of properties is just as taxable as a sale. Gain
    or loss is measured by subtracting your adjusted basis for the property
    traded away from the fair market value of the property received. Fair
    market value for the two properties is deemed to be equal and set at
    whichever can be more easily and accurately determined.

    Second, there are many exceptions to the general rule. These exceptions are
    all spelled out in code sections written by Congress to accomplish certain
    governmental goals. Many corporate transactions are very carefully
    structured by management (with advice from attorneys and CPAs) to fit within
    one of these exceptions. In order for us to know how a particular
    transaction is to be treated for tax purposes, we need to read the
    voluminous documents from corporate management to see which code section
    applies.

    Was your mutual fund exchange engineered by the fund managers to fit a code
    section? (This is not too unusual when managers are re-aligning funds
    within the "family".) Or was it a straightforward exchange that you
    initiated by calling your broker and saying that you think XYZ looks better
    than your ABC, so please swap them for me? (In that case, you would treat
    it as a sale of your ABC and a purchase of XYZ. All prior basis numbers and
    dates would be forgotten after the ABC sale is recorded.) Or did the
    exchange happen in some other way?

    If this is an management-initiated exchange, you should have received
    information about what happened "in the real world". With that, you should
    be able to figure out how to record it in Quicken - and we'll be glad to
    help. You also should discuss this with your own CPA and broker.

    RC
    --
    R. C. White, CPA
    San Marcos, TX
    (Retired. No longer licensed to practice public accounting.)

    Microsoft Windows MVP
    (Currently running Vista Ultimate x64)

    "Ira" <> wrote in message
    news:...
    > Greets,
    >
    > Does anyone know how to enter in an exchange of mutual fund ABC for
    > mutual XYZ? Its not a "corporate acquisition" or "corporate name
    > change", since its occuring in mutual funds, but I dont want to lose
    > the basis of all the dividend reinvestments simply by issuing a sell
    > and a buy.
    >
    > Any help is greatly appreciated.
    >
    > Thanks!
     
    R. C. White, Jul 4, 2007
    #5
  6. Ira

    Ira Guest

    I am so pleased that you have all taken the time to respond. I still
    have not yet taken action because CORPORATE ACQUSITION requires more
    information (something about a per share price being offered).

    However, I cannot answer your kind questions for more information. If
    I had it, I certainly would have provided it.

    The best I can say is that my merrill lynch statement showed up with
    the following:

    6/27 ESCBX EXCHANGE -38
    6/27 GCVBT EXCHANGE +38

    E = AXA Enterprises Small Co Value
    G = Goldman Sachs Structured Small Cap Value B

    It was not a sale and purchase (that would be SELL and BUY). This is
    all the info I have. I am wondering if AXA was taken over by Goldman
    Sachs

    Thanks

    On Wed, 4 Jul 2007 09:08:27 -0500, "R. C. White" <>
    wrotf:

    >Hi, Ira.
    >
    >As JM said, we need a lot more information before we can give an intelligent
    >answer.
    >
    >First, the Internal Revenue Code taxes gains on "sales and exchanges". In
    >other words, an exchange of properties is just as taxable as a sale. Gain
    >or loss is measured by subtracting your adjusted basis for the property
    >traded away from the fair market value of the property received. Fair
    >market value for the two properties is deemed to be equal and set at
    >whichever can be more easily and accurately determined.
    >
    >Second, there are many exceptions to the general rule. These exceptions are
    >all spelled out in code sections written by Congress to accomplish certain
    >governmental goals. Many corporate transactions are very carefully
    >structured by management (with advice from attorneys and CPAs) to fit within
    >one of these exceptions. In order for us to know how a particular
    >transaction is to be treated for tax purposes, we need to read the
    >voluminous documents from corporate management to see which code section
    >applies.
    >
    >Was your mutual fund exchange engineered by the fund managers to fit a code
    >section? (This is not too unusual when managers are re-aligning funds
    >within the "family".) Or was it a straightforward exchange that you
    >initiated by calling your broker and saying that you think XYZ looks better
    >than your ABC, so please swap them for me? (In that case, you would treat
    >it as a sale of your ABC and a purchase of XYZ. All prior basis numbers and
    >dates would be forgotten after the ABC sale is recorded.) Or did the
    >exchange happen in some other way?
    >
    >If this is an management-initiated exchange, you should have received
    >information about what happened "in the real world". With that, you should
    >be able to figure out how to record it in Quicken - and we'll be glad to
    >help. You also should discuss this with your own CPA and broker.
    >
    >RC
     
    Ira, Jul 4, 2007
    #6
  7. Ira

    Guest

    I have the exact question as Ira, except that I DO KNOW the
    circumstances of the exchange. In my case, I had a couple of funds
    with TIAA-CREF which were "merged" into other retail versions of the
    same funds. Unfortunately this merge--which TIAA says is a NON-
    TAXABLE event--was not on a 1-share for 1-share exchange basis, and I
    am now with the problem of trying to figure out how to preserve the
    basis cost from the "old" account in the "new" merged account.

    Any ideas will be very much appreciated (I am afraid that corporate
    acquisition will not do the trick, will it?)

    Thanks.
     
    , Jul 14, 2007
    #7
  8. Ira

    Guest

    One more thing, the number of new shares have nothing to do with the
    number of old shares. So I am concerned that transforming every old
    transaction into a new one, as suggested by dillapides above, will
    result in a lot of accuracy errors.
    Thanks.
     
    , Jul 14, 2007
    #8
  9. Ira

    John Pollard Guest

    wrote:
    > One more thing, the number of new shares have nothing to do
    > with the
    > number of old shares.


    I think this is unlikely. I believe you need to provide
    concrete evidence that it is so.

    --
    John Pollard
    First initial underscore Last name at mchsi dot com
    Please reply to newsgroup
     
    John Pollard, Jul 15, 2007
    #9
  10. Ira

    Guest

    I posted my question to Quicken support and they confirmed some of the
    suggestions posted in this forum before. For the sake of completeness
    and to close the discussion, here is Quicken support's response:

    "I understand your concern completely and in this case you can use the
    transaction type as Corporate Acquisition in enter transaction field
    and it will competently take care of your concern. To do this
    appropriately just follow the step by step procedure mentioned in the
    link I am giving you:

    Title: How do I record a corporate acquisition (stock-for-stock)?
    URL: https://quicken.custhelp.com/cgi-bi.../std_adp.php?p_faqid=4883&p_created=115342626
     
    , Jul 18, 2007
    #10
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