Re: Ford/Visteon Spin-off
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Posted by Mark on July 01, 2000 at 20:22:12:
In Reply to: Re: Ford/Visteon Spin-off posted by Dennis Kowallek on July 01, 2000 at 18:19:36:
: : 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? Yes. : 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
buys/sells. Thanks,
Mark
--
Mark Beiley
Fund Manager for Windows 3.1x/95/98/NT
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