Company splits in two

Hi All,

Question for those with shares. I have shares in a company that has separated it's gold and lithium businesses into 2 companies. (FFX split off the lithium to LLL).

What is the best way to record this transaction in Quicken?

Cheers,

Kevin

Comments

  • 486610
    486610 Member Posts: 1

    Similarly: LEP was suspended. We received an allocation of 1831 CLW shares + cash for the balance of LEP. LEP stock needs to reflect zero stock; CLW must reflect 1831 stock

    What is the best way to record this transaction

    Cheers Sylvia

  • Kevin
    Kevin Member Posts: 21

    I ended up entering it a SOLD one company and bought two others. Can mess up Capital Gains tax if your lucky enough to eventually sell at a profit.


    Cheers,

    Kevin

  • David M
    David M Member Posts: 79

    This is the long way round but gives the right answers eventually for CGT.

    In each of the examples quoted, the ATO has been asked for, and given a Tax Ruling, on the proportion of the cost base of the original company should be allocated as the cost for the split off Company. In the first example that would have been FFX as the original stock and it would have retained 40.91%, and 59.09% would have been allocated to LLL. If you treat the 59.09% as a capital return from FFX and use it to buy LLL you are set.

    You have now reduced your cost base in FFX and have the correct cost base for your investment in LLL and retained the dates for CGT.

  • David M
    David M Member Posts: 79

    Hi Sylvia

    In your situation, if you were fortunate, The ATO would have granted roll-over relief on the transaction. In which case you will have "purchased" the 1831 shares in CLW for - your original cost of the LEP you used to own less the cash you received-, and sold the CLW for original cost making zero profit.

    That only requires you to remember that when you eventually sell the CLW, the tax effective date of its purchase was when you originally purchased your LEP.

    If you did not get roll over relief, then you should have had a communication from CLW advising of what the deemed values were for tax.

    Hope that helps.