Stock Liquidation transaction - Q2001deluxe


Molin Vardo

Purchased 889 shares of Fund several years ago. June Statement from our
broker (Charles Schwab) shows under "investments": FUNDXXX Liquidation
of Fund effective 6/19/03. No price is listed.

July Statement, under "Transaction Detail - Cash Activity": FUNDXXX
Liquidation. Nothing under "Quantity" or "Price", but under "Total"
there is a sum of $2240.28.

Then under "Investments Activity":

Cash/Stock Liquid: FUNDXXX ESCROW FOR POSS FUTURE, and under
"Quantity", 889 shares - followed on the next line by:

Cash/Stock Liquid: FUNDXXX LIQUIDATION OF FUND, and under
Quantity", (889) shares

I believe I understand what has occurred: The stock has been
liquidated, putting $2,240.28 into my cash account. And the "Cash/Stock
Liquid" entries are to remove the 889 shares from my investment account.

HOWEVER, what I don't understand is that FUNDXX after all this, is still
shown under "Investment Detail" as: FUNDXXX ESCROW FOR POSS FUTURE

How should I record the $2,240.28 payment against liquidation of these
889 shares (which would show up on my taxes, I suppose, as profit or
loss on "sale" of stock). And then continue to show the 889 shares
(with a possibly to be "liquidated" again?) That seems the direction
Schwab is moving!

Anyone have a simple straightforward means to setup these transactions
in Quicken. Apparently I now have 889 shares of stock that have no
value, BUT can be "liquidated" again, creating additional profits or




Fred Smith

Sorry, but posting the same message three times will not triple your
responses. It actually reduces your chance of a response, because some
people will assume that a reply has been posted and move on to the next

For the current transaction, I would post a Sell of the 889 shares for
proceeds of $2240.28. Quicken will figure out the share price, and the
capital gain/loss.

If you want to get ready for future proceeds (don't hold your breath),
create a new security. Do a ShrsIn for 889 shares at zero. If you get any
more money, you can sell the shares, and the proceeds will show as a capital
gain. If you never get any further proceeds, post a ShrsOut.

Or, ignore the shares in escrow until you actually receive some money. If
this happens, create the security and post a sale.

R. C. White

Hi, Fred - and Molin.

(I only see the message once, Fred; maybe the news server tripled it just
for you? ;^} )

I half agree with the suggested treatment of Molin's transaction.
Liquidation of a corporation sometimes happens as a single transaction, but
often happens as a string of distributions over time, maybe years. This is
considered a single disposition of the shares, but neither the total amount
nor the timing can be determined until the Final Distribution. Whether in
one transaction or several, the proceeds are referred to as "liquidation
distributions". The shareholder treats the amounts received as Return of
Capital until the total exceeds the shareholder's basis for the shares. Any
further proceeds are Capital Gains, subject to the usual rules for those.
Until the Final Liquidation Distribution, the shareholder still holds the
shares; they are just worth less and less after each partial distribution
and are worth nothing after the final distribution.

I've not had occasion to deal with this in a "fund" situation (I assume
Molin means a typical mutual fund), but I see no reason to treat it

For this first distribution, Molin, I would record it as a Return of Capital
on that Fund. The share balance would remain the same. The Return of
Capital would reduce your basis (cost), but would not generate a gain unless
it reduced your basis to zero. If this $2,240.28 is more than your basis,
then report it like a sale of the 889 shares for that amount, showing your
entire basis as the cost of the shares, with the resulting gain, either
long-term or short-term, as appropriate. Any further distributions will be
recorded like sales of 889 shares, but with zero cost, meaning that the
proceeds are all gain. If this $2,240.28 is less than your basis, then it
need not be reported at all on this year's tax return; just remember to
reduce your basis by this amount for future reporting. When you receive the
final distribution, if you have remaining basis, report it as a sale of the
stock at a loss.

That's the way I would have handled it before I retired a decade ago. Check
with your own CPA to be sure that the rules haven't changed since then.


Fred Smith

Yours is a much better suggestion than mine, R.C. In addition to conforming
to US rules (which, as always, are different from Canadian), the RoC
transaction keeps the shares around.

BTW, on my server, there was a main message and two identical replies. Maybe
your server deletes identical replies. Regardless, the posted has received
good advice.



R. C. White

Hi, Fred.

In my 30 years of public accounting, I did returns for many US states, but
never a Canadian return. Of course, I was in California and Oklahoma; it
probably would have been different if I had been in a state along the

As to multiple messages in this newsgroup, almost every day, when I sign on
and go to the Next Unread Message, I often see posts that I KNOW I've
already read a day or two ago. Today (8/7) there are some date 7/30 and
7/31 that I read several days ago. This revived-posts problem has been
happening for months, with a half-dozen or more of them out of the 50 or so
"new" messages each day. I don't know if the duplications are in my local
ISP, or in the news server that the ISP uses, or in the news server that
actually hosts this Quicken newsgroup.


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

Liquidation 1
Stock liquidation 1
Liquidation 2
Resigning as Liquidator 4
Partnership Liquidation 5
Q2001Deluxe - Bond Fund Change 2
Canada Liquidation Report 0
Definition of Liquidity 8