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From: Keith Snyder on 7 Jul 2010 09:10
Verizon sold its wired communications to Frontier Communcations (FTR). As a
result, suddenly as
of 7/2 I own 0.24 shares of FTP.

How do I enter this transaction in my Q2010 investment register(s).? I want
to show cost basis I think,
but this is not purchased stock, nor a gift. How on earth do I account for
it?


From: Caryl on 7 Jul 2010 15:01
On Jul 7, 9:10 am, "Keith Snyder" <m...(a)privacy.net> wrote:
> Verizon sold its wired communications to Frontier Communcations (FTR). As a
> result, suddenly as
> of 7/2 I own 0.24 shares of FTP.
>
> How do I enter this transaction in my Q2010 investment register(s).? I want
> to show cost basis I think,
> but this is not purchased stock, nor a gift. How on earth do I account for
> it?

Frontier is a spinoff from Verizon. I have the stock in Fidelity and
their website indicates that I now have 36 shares of the new company
at a cost of 0. So the transaction was entered in the Quicken register
as "Add - Shares Added," "Total cost: 0.00, and "Date Acquired:
7/2/2010." The memo space says "Distribution Spinoff from Verizon."

Caryl
From: R. C. White on 7 Jul 2010 17:37
Hi, Keith.

Use Quicken's Corporate Securities Spin-off transaction wizard to record
this. No, this was not a gift and your cost basis is NOT zero. Your former
cost basis in Verizon is now allocated between your VZ, which you still
have, and the new FTR shares. If you were entitled to a fractional share,
that was sold immediately and you received cash. Record this cash received
as a sale of the fractional share, using its newly-computed basis as its
cost, and showing its acquisition date as the date when you acquired the
Verizon shares.

The wizard works well for most such spin-offs - with one important caveat:
It asks for "cost" of the old and new shares. But THAT is what Quicken will
be calculating, based on information you supply. What you must enter is not
"cost", but FMV (Fair Market Value) of the VZ and FTR shares immediately
after the spin-off. Those FMVs should be available from Verizon very soon,
if not already.

Test Quicken's allocation by comparing your total basis of VZ + FTR now with
your pre-spin-off cost of VZ. The only difference should be the cost of the
fractional share.

Verizon doesn't make it easy to navigate their site, but I eventually found
this page, which spells out the complicated transaction (in 443 pages of
dense prose which, of course, I have not read!).
http://investor.verizon.com/sec/frontier/Verizon%20Frontier%20Information%20Statement.pdf

A one-paragraph version is in Investor News at
http://investor.verizon.com/news/view.aspx?NewsID=1062

This page, dated July 1, 2010, says in part:

"Verizon stockholders are receiving one share of Frontier common stock for
every 4.165977 shares of Verizon common stock they owned as of June 7, 2010.
This is equivalent to approximately 0.24 shares of Frontier common stock for
each share of Verizon common stock owned as of June 7, 2010. Verizon
stockholders are receiving cash in lieu of any fraction of a share of
Frontier common stock."

I've been retired for nearly 20 years, Keith, and the rules may have
changed, so be sure to check with your own CPA to be sure that this is still
the correct treatment.

RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc(a)grandecom.net
Microsoft Windows MVP
(Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64)

"Keith Snyder" wrote in message news:k1%Yn.8242$Hw.5790(a)newsfe10.iad...

Verizon sold its wired communications to Frontier Communcations (FTR). As a
result, suddenly as
of 7/2 I own 0.24 shares of FTP.

How do I enter this transaction in my Q2010 investment register(s).? I want
to show cost basis I think,
but this is not purchased stock, nor a gift. How on earth do I account for
it?

From: Caryl on 7 Jul 2010 18:23
On Jul 7, 5:37 pm, "R. C. White" <r...(a)grandecom.net> wrote:

> Use Quicken's Corporate Securities Spin-off transaction wizard to record
> this.  No, this was not a gift and your cost basis is NOT zero.  

Keith, I am sorry that I gave you the wrong information about this and
am glad that R. C. corrected me. I had said to use "Add Shares"
because that is what was used when Quicken's One Step Update added the
Frontier shares. I am now changing it to a Corporate Securities Spin-
off transaction.

>Your former
> cost basis in Verizon is now allocated between your VZ, which you still
> have, and the new FTR shares.  
>
> The wizard works well for most such spin-offs - with one important caveat:
> It asks for "cost" of the old and new shares.  But THAT is what Quicken will
> be calculating, based on information you supply.  What you must enter is not
> "cost", but FMV (Fair Market Value) of the VZ and FTR shares immediately
> after the spin-off.  Those FMVs should be available from Verizon very soon,
> if not already.

R. C., I am confused about FMV. Where does one find these figures?

I think the Fidelity must have the cost basis for Frontier as 0 in its
records because they also have the cost basis of Verizon as 0. This is
because the Verizon stock was not bought through them but was given to
them to be put into our account at a later period. Therefore, they do
not have the cost. (Quicken does have the cost, so if and when I sell
VZ I have it.)

Caryl

From: Keith Snyder on 7 Jul 2010 18:48
Thank you very much. I had a vague understanding that VZ cost basis is
reduced by the
amount of the spinoff, and I was going to go from there, treating the cost
of FTR on 7/2
sort of like a Return of Capital for VZ. Instead I'll go looking for the
spinoff wizard.

Again, thank you.

"R. C. White" <rc(a)grandecom.net> wrote in message
news:kqedncJheqY1bqnRnZ2dnUVZ_sCdnZ2d(a)posted.grandecom...
> Hi, Keith.
>
> Use Quicken's Corporate Securities Spin-off transaction wizard to record
> this. No, this was not a gift and your cost basis is NOT zero. Your
> former cost basis in Verizon is now allocated between your VZ, which you
> still have, and the new FTR shares. If you were entitled to a fractional
> share, that was sold immediately and you received cash. Record this cash
> received as a sale of the fractional share, using its newly-computed basis
> as its cost, and showing its acquisition date as the date when you
> acquired the Verizon shares.
>
> The wizard works well for most such spin-offs - with one important caveat:
> It asks for "cost" of the old and new shares. But THAT is what Quicken
> will be calculating, based on information you supply. What you must enter
> is not "cost", but FMV (Fair Market Value) of the VZ and FTR shares
> immediately after the spin-off. Those FMVs should be available from
> Verizon very soon, if not already.
>
> Test Quicken's allocation by comparing your total basis of VZ + FTR now
> with your pre-spin-off cost of VZ. The only difference should be the cost
> of the fractional share.
>
> Verizon doesn't make it easy to navigate their site, but I eventually
> found this page, which spells out the complicated transaction (in 443
> pages of dense prose which, of course, I have not read!).
> http://investor.verizon.com/sec/frontier/Verizon%20Frontier%20Information%20Statement.pdf
>
> A one-paragraph version is in Investor News at
> http://investor.verizon.com/news/view.aspx?NewsID=1062
>
> This page, dated July 1, 2010, says in part:
>
> "Verizon stockholders are receiving one share of Frontier common stock for
> every 4.165977 shares of Verizon common stock they owned as of June 7,
> 2010.
> This is equivalent to approximately 0.24 shares of Frontier common stock
> for
> each share of Verizon common stock owned as of June 7, 2010. Verizon
> stockholders are receiving cash in lieu of any fraction of a share of
> Frontier common stock."
>
> I've been retired for nearly 20 years, Keith, and the rules may have
> changed, so be sure to check with your own CPA to be sure that this is
> still the correct treatment.
>
> RC
> --
> R. C. White, CPA
> San Marcos, TX
> (Retired. No longer licensed to practice public accounting.)
> rc(a)grandecom.net
> Microsoft Windows MVP
> (Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64)
>
> "Keith Snyder" wrote in message news:k1%Yn.8242$Hw.5790(a)newsfe10.iad...
>
> Verizon sold its wired communications to Frontier Communcations (FTR). As
> a
> result, suddenly as
> of 7/2 I own 0.24 shares of FTP.
>
> How do I enter this transaction in my Q2010 investment register(s).? I
> want
> to show cost basis I think,
> but this is not purchased stock, nor a gift. How on earth do I account for
> it?


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