Bond reissue question


P

Philip

I had a bond that was exchanged for two bonds by the bond issuer. As a
result, one bond was replace by two bonds. For tax purposes, the
purchase date of the new bonds should be the same as the orginal
bonds. What would be the best way to record this in Quicken 2004
Premier?
 
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D

DG

In order of preference, I would either re-record the original purchase as
two shares, or do the Corporate Acquistion transaction with allows you to
record the two for one exchange (although you might have to fudge the
corporate name to get this to work).
 
P

Philip

Thanks. I have tried the re-record option in the past but I lose the
historical data for the security. Not a big deal but I was hoping for
a cleaner option. Your other idea give my a idea of doing a spinoff
followed by a shares out or sell of the orginal bond. I would of
thought that quicken wouuld have able to handle this better,
 
R

R. C. White

Hi, Philip.

A bond is not a stock. They are similar in some ways, but they are
different enough that the same rules often do NOT apply. Stock represents
ownership of part of the company; a bond represents debt owed by the
issuer - which might not even be a corporation, but a government, a charity
or some other issuer. You probably knew this, but you might not have
thought through what it means for this transaction.

You need to contact the issuer (or a well-informed broker, lawyer or other
knowledgeable person) who can explain exactly what this transaction was, and
just how it affects your tax situation. One thing is clear: It was NOT a
corporate acquisition or spinoff!

This exchange transaction may be taxable to you, or not. The tax rules use
the phrase "sale or exchange" when discussing gains and losses. An exchange
is just as taxable as a sale, using the value of the asset(s) given up or
the asset(s) acquired, whichever value can be determined with more accuracy.
Exchange of one bond for two bonds is taxable - unless you can show that the
exchange fits within one of the several highly-technical exceptions. I've
been retired too long to have ready access to tax publications that would
answer the obvious questions about this transaction. Heck, I don't even
know the name of the issuer, or whether it is a corporation, a government,
or other.

In short, you need some expert advice for your specific situation. If this
advice is not available from the bond issuer or other authoritative source,
you may need to consult a tax attorney or CPA.

Once you understand the transaction and its tax significance, the Quicken
treatment should be easy to figure out.

RC
 
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P

Philip

Thanks. This was a non-taxable event. I know what a bonds is and
relaize this was not a spinoff. I was just trying to figure out the
best way to record the event. In hindsight, it was oblivious. I ended
up using a shares out and a shares in.
 

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