Transaction type for BIPC spin-off from BIP

gsbaker

I entered the BIPC spin-off from BIP (1 BIP -> 1 BIP + .11 BIPC) as described in your March 2019 reply to Jeremy re: the Alcoa/ARNC transaction - namely using the SymbolTransferOut and SymbolTransferIn transaction types to adjust the ACB of BIP and to record the transfer in of the BIPC shares at the appropriate ACB. What is happening though is that the SymbolTransferIn transaction for BIPC is showing up as a deposit on the "Deposits" tab. This seems to be misleading as there is no net new money being deposited in to the account. The transfer in/out of the BIP shares do not show up on this tab (but maybe they netted each other out though). Should this transaction show up as a deposit? If not, how should it be recorded so it doesn't?

Thanks

VidasMatelis

Hi,

When you do SymbolTransferOut - Price x Qty should be the same as new SymbolTransferIn Transaction or transations. If these amounts are the same, total deposit/withdrawal amount should end up beeing 0.

gsbaker

That seems to be what is happening to the TransferSymbolIn and Out transactions to record BIP and adjust the ACB. However there is a 3rd transaction - a TransferSymbolIn transaction to record BIPC - see example below.



I wonder if the BIPC transfer in should be recorded as Price = 0 and CostBasisOverride being $52.50 in this example?

VidasMatelis

So you have to take care of two numbers:
1. Qty x Price for SymboltransferOut should be Equal Sum of QtyxPrice of SymbolTransferIn.
This is not what you have. Currency SymbolTransferOut = 1 x 52.25 = 52.25. SymbolTransferIn is 1 x 52.25 + 0.1111x52.25 = 58.05. Please adjust these prices, so that they make sense, because lets say you will set Symbol2 Price as 0.10, but in Quotes.csv file price will be 10, so you will have huge jump that day for capital gain. So identify price difference - lets say 80% / 20% and use that to calculated price.
2. The same way should be for Cost basis. Most likely you just need to override CostBasis just for SymbolTransferIn operations, that is if you original CostBasis was 58.67, split that cost basis between these 2 symbols in a way that makes sense - that is use same 80% / 20% original cost basis assignment.

gsbaker

Ok, I think I have it figured out. As follows:

1. SymbolTransferIn of new spin-off company - BIPC at the share price on the date of the transfer - this establishes the FMV transferred in and the ACB transferred in at share price on day of transfer (I used values provided by brokerage)
   
2. SymbolTransferOut of BIP at the FMV/share price on the date of the spin-off - this removes the full ACB of BIP
   
3. SymbolTransferIn of BIP to put BIP back in at:
   

• FMV=FMV of BIP tranferred out (step 2) - FMV of BIPC Transferred in (step 1) - so that total FMV transferred out (step 2) = total FMV transferred in (step 1 + step 3)
  
• ACB= ACB of BIP transferred out (in Step 2) - ACB of BIPC transferred in (in Step 1) - so that total ACB transferred out (step 2) = total ACB transferred in (step 1 + step 3). I Used CostBasisOverride to establish new ACB of BIP.
  

Fractional shares complicates things a little bit as the spin-off pays cash in lieu of fractional shares. I dealt with those by including fractional shares in the calculations in Step 1 (which adds the ACB of those fractional shares to the total ACB of BIPC). Then when cash is received I recorded it as a sale of the fractional shares - which removes the ACB of those fractional shares. This does create a small capital gain/loss on the sale of those fractional shares but the value is very small and to me not worth worrying about.

VidasMatelis

Hi,

Thank you for sharing your calculations - this will help other users in a similar situation!