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Vodaphone (VOD) reverse split and distribution to Verizon shares (VZ)

What's the best way to account for this activity in Quicken?

Start with 140 shares of VOD

Reverse split yields 76 shares VOD

"Distribution spinoff from VOD"  yields 36 shares of VZ

I've done a reverse split transaction in Quicken fir VOD and a 'Shares added' transaction for my new VZ shares, but it just doesn't seem right to me.  Is there a better way to account for this?

  • It appears there is also cash involved in the deal which greatly complicates the transaction.  I suggest you sit tight for a bit and let the dust settle before trying to process this in Quicken.  It is likely there will be more definitive statements coming out from VOD and VZ on the associated taxability issues.

This transaction involves payments for fractional shares, the amounts of which (per share) we do not yet know (as of Feb 24).  This is in addition to the $4.928005 cash per old share of Vodafone that is part of the "Return of Value" (that is, a return from Vodafone to its shareholders of a substantial portion of what Verizon paid to Vodafone for Verizon Wireless), which has not yet been distributed to the VOD shareholders.  There will be cash payments for the fractional shares resulting from the Vodafone reverse split and for fractional shares resulting from the distribution of Verizon shares.  Each old share of VOD was entitled to receive 0.263001 shares of VZ, so in your case you will have a cash payment in lieu of 0.82014 shares of VZ.  (140 shares VOD x 0.263001 = 36.82014)  For the VOD reverse split, which was 6 - for - 11, you will have a cash payment in lieu of 0.3636 shares of VOD (140 shares of VOD x 6/11 = 76.3636).

What I have done in Quicken is to do the reverse split to record the correct number of whole shares of VOD, and then I entered a sale transaction for the fractional share of VOD using a per-share price that I selected based on the Feb. 24 closing price of VOD.  (When you receive cash in lieu of a fractional share, if it's in a taxable account, I believe it is treated as having a short-term holding period.)   When I know the actual amount, I will go back and edit that transaction.  I treated the Verizon shares that I received as "Shares Added" -- this allows you to add shares to an account without affecting the cash balance -- and for the cost I used a per-share price based on today's closing price for VZ.  Once I know the actual cost basis assigned to these shares (from my broker's website display of my account), I will go back and edit that amount.

The only thing I'm not sure of how to do is to adjust the cost basis of my VOD shares to reflect the correct amount that I will get from my broker's website.  Normally, in a plain vanilla stock split, while the number of shares changes, and thus the per-share cost basis will change, the aggregate cost basis doesn't change.  But in the VOD situation, the aggregate cost basis will change.

  • Excellent. But it is still unclear how to correctly calculate the basis in my "new" Vod shares. It is not a classic stock split. The total basis has apparently changed. Anybody understand the calculation of the new basis?
  • It is laid out several time in this discussion.  It is not a classic stock spinoff.  It is a standard or classic stock split.  The only change to the VOD basis occurs when you sell the fractional shares you received from the reverse split.
  • Thanks so much.  You are saying basis remains the same. I understand that.  Problem was that my own Quicken basis  is apparently "incorrect" or "different" compared to what my basis is now on my brokerage account.  Unfortunately it is lower than what I had in Quicken.
  • Perhaps you need to start your own separate discussion on that aspect.  Such a topic would not relate to the VZ dividend.
  • I agree.  I have owned VOD for a long time and perhaps there were some "issues" in my inputting basis information into Quicken years ago.  Somehow my Wells Fargo brokerage account (only six years old) has a lower basis post VZ dividend than I have on my quicken. I was just concerned that Wells was treating the post VZ distribution basis in VOD stock differently than a normal reverse stock split. You are saying that it is the classic stock split.  I think you are right.
  • See this example, from a longer post that I made a few days ago, on how your cost basis in VOD should be reflected in Quicken:

    Example:  say you had 100 old shares of VOD with a cost basis of $26 per share, = aggregate cost basis of $2,600.  The reverse split gives you 54.545 new shares of VOD (100 x 6/11).  At this moment in time, before the fractional share is sold, your aggregate cost basis is still $2,600; thus, your per-share cost basis is $47.67 ($2,600 divided by 54.545 shares).  (I'm rounding dollars to the nearest cent and shares to the nearest 1/1000 of a share.) This is the same cost basis as taking the old per-share cost basis of $26 and multiplying by 11/6.  However, you received cash in lieu of the fractional share -- that is, what you actually own is 54 shares of VOD, and a small amount of cash.  Based on what I received for my VOD fractional share in one of my accounts -- $27.45 for 0.659 shares, which works out to a per-share selling price of $41.654 (I actually received a slightly different per-share amount, $41.69, for a fractional share I held in another account, so yours may differ also) -- in this example the fractional VOD share of 0.545 would give you $22.70 in cash (0.545 times $41.654).  Your cost basis in that 0.545 fractional share was  $25.98 (0.545 times $47.67, the post-split per-share cost basis), so you have a small capital loss ($22.70 sales proceeds minus $25.98 cost  = negative $3.28).  Since this fractional share of VOD was sold, your AGGREGATE cost basis for VOD should be your original cost basis of $2,600 minus $25.98 (the cost basis in the fractional share) = $2,574.02.  Your per-share post-split cost basis will be your pre-split per-share cost basis times 11/6, with a slight adjustment for the sale of the fractional share.
  • If you didn't enter the VOD reverse split manually -- in my example, 100 old shares and 54.545 new shares of VOD -- but instead accepted a downloaded transaction from your broker that shows your account having had 100 shares of old VOD removed and 54 new shares of VOD added, that could explain some of the discrepancy in your cost   Basis.
  • Again thanks. But you know now I realize hat Wells did is wrong. They are treating it as a taxable stock SPINOFF  not a stock SPLIT. That is how they arrived at my new basis. They are wrong. I will keep my old (and higher basis.  I will double check tonight when I return.
  • By all means, talk to Wells, and ask especially to talk to someone in their cost-basis reporting department (which is what I did with Fidelity to ask about the cost basis of the VZ shares and, thus, the value of the part of the dividend that was paid in VZ shares).  VOD stated, both in the circular they sent to shareholders and on their website in the Q & A for U.S. shareholders, that they expect the entire special dividend (cash plus theVZ shares) to be a dividend for U.S. tax purposes.
  • Definitely will double check how they arrived at their basis. But yes the new shares of VZ and all the cash is a taxable dividend for 2014. That I know for sure. I agree basis should stay the same at VOD. Will just double check later tonight on how Wells nay have arrived at their basis figure when I have a different one. As I said they may have figured it was a spin off but maybe not. Who knows? Brokerage firms are not always right for sure No big deal because brokers do no report basis if you acquired  stock before 2011. So you can report your own basis. Gotta run
  • My apologies!!!  I just double checked my Wells Fargo statement from two months ago--before nay possible VZ  complications. They show the same basis as they are now reporting on March 6.  So basis is the same. My quicken basis is derived form my own inputs there. As I said I have owned VOD for many years and I believe my basis in Quicken is correct. Wells somehow has a different basis. Not worried about the difference any longer since I know Wells has at least treated it correctly as stock split. For sure the cash dividend I received yesterday and VZ distribution is taxable. A big taxable  hit in 2014 which people should be aware of!!!
  • Well, good luck with your records.  If your VOD shares are held in a taxable account, any shares you acquired in 2011 or later (including through reinvested dividends) are subject to their cost basis being reported by your broker if you sell those shares.
  • thanks.  i think the numbers will come easily by the end of the month.  i confess i will be unhappy for the short term if the fair value number ($48.115) becomes the cost basis per verizon share - adds to current year taxable dividends.

    on the cost basis reporting - i just finished my taxes for 2013 using one of the self use products.  given the way the broker has to report stuff, it took me more than twice as long to prepare the return.  i have not asked the broker, but i wonder how he is going to report the value of the verizon share dividend.
I, too, have my brokerage accounts at Fidelity.  Fidelity characterized the Verizon shares that I received as a "Distribution Spin off."  However, the value of these shares will be treated as a dividend, according to the Vodafone prospectus (which was quoted above); also, I checked with Fidelity's tax dept. and the value of the Verizon shares I received (at the closing price of $46.23 on Feb. 24) will be included in the dividends reported on the Form 1099-DIV for 2014 when it is sent out next year.  (This applies only to taxable accounts, obviously).

So, I think this is one case where you probably want to enter all of the steps manually, rather than downloading from one's broker, so that you can correctly characterize the receipt of a dividend paid in the form of Verizon shares, as well as the cash dividend (yet to come -- supposed to be on March 4) and the cash in lieu of the fractional shares.  Today (Feb 25) I am seeing a credit for cash in lieu of a fractional share; I'm not sure whether this is only for the fractional share of VOD after the reverse split, or if it also includes payment for the fractional share of Verizon.

I also note that the total cost basis in my shares of VOD has not changed as a result of the transaction, so, as I think another poster commented, one is likely to now show a loss on the shares, compared to whatever gain/loss you might have had prior to this transaction.  I think theoretically that's the right result, because VOD shareholders now own shares in a company that is roughly half the size it used to be.

By the way, the numbers for the cash portion of the dividend --$4.928005 per old share of VOD -- and for the Verizon shares portion -- 0.263001 shares of VZ for each old share of VOD -- I obtained directly from the Bank of New York, which is the bank that handles administrative matters for the VOD American Depositary Receipts.  They have a dedicated phone number, found on the Vodafone website.
    To forumuser:  to take your last questions first, I haven't found a way for Quicken to show the VZ stock distribution as a dividend on VOD.  When I tried entering a transaction as a non-cash dividend, there wasn't an option to have the dividend be "paid" in a different company's stock (VZ) than that of the company paying the dividend (VOD).  I assume that Quicken's programmers didn't anticipate this kind of thing.  (I'm guessing that most of the occasions when the holders of one company's stock receive another company's stock, it's usually a merger, acquisition, or a true spin-off -- the last of these being when the shareholders of a company receive shares in a new entity that has been separated from the parent company.  Quicken can handle those types of transactions.  This VOD/VZ transaction isn't a real spin-off; if it were, then the VOD shareholders would have ended up with shares of Verizon Wireless or some such similar entity.  Rather, VZ now owns all of Verizon Wireless, and VOD shareholders own VOD without the 45% of Verizon Wireless that it used to own.)

    Yes, Quicken (and your broker) would show a substantial loss on the VOD shares, post-split/VZ distribution.  VOD shareholders now own shares in a company that is much smaller than it was before this transaction.  Of course, in an aggregate sense, you're not so badly off because you received a substantial dividend (the VZ shares plus the cash that is to come).  Here's another way to look at it:  when a company goes ex-dividend, theoretically its market value will drop by the amount of the dividend (in actuality, the change in value may be different due to other events in the market).  Why? Before the ex-dividend date, you have a share of stock that is entitled to the dividend; on the ex-dividend date, if you were to buy a share of the stock, you wouldn't get the dividend, so it is worth less than before it went ex-dividend.  We just got a huge dividend from VOD, and in return we gave up VOD's right to receive dividends from its share of ownership of Verizon Wireless.  If VOD hadn't done the reverse stock split, the market price of a share of VOD would have dropped substantially after the transaction.  They did the reverse split in order to make the price of a share of VOD, post-Verizon Wireless transaction, comparable to the price of a share of VOD before the transaction, and Vodafone's Circular says this.  (On Friday, Feb 21, the closing price of VOD was $39.00.) That's why the reverse-split ratio (6 new shares for 11 old shares of VOD) couldn't be announced until very shortly before the actual split occurred -- they basically started with the end result that they wanted to achieve (in terms of the VOD share price appearing to be stable, when viewed over time), and then calculated the split ratio that would get that result.

    I should have been more exact in referring to "before-split" and "after-split" prices regarding cost basis.  What I should have said is that your post-split cost basis per share of VOD should be 11/6 times your pre-split basis per share.  Your aggregate cost basis for VOD post-split should be equal to your aggregate cost basis pre-split, adjusted for the "sale" of the fractional share of VOD.  (My brokerage, Fidelity, calculated a cost basis for my fractional share of VOD and, thus, the short-term capital loss on that fractional share.).

    Here's another way to understand it: in a split, or reverse split, the number of shares you own changes, but you haven't received (or lost) any value (ignoring, for the moment, the fractional share piece).  If you bought 100 shares of Company X at $100 a share (total cost $10,000) and then it split 2-for-1, you'd own 200 shares, still with a total cost of $10,000, and thus your per-share cost would now be $50 -- half of the pre-split price.  The size of the whole "pie" (the value of the company) hasn't changed as a result of the stock split; it's just cut up into more slices.  In the case of VOD, the size of the "pie" (the value of VOD as an entity) HAS gotten smaller, not because of a split but because it sold its 45% share of Verizon Wireless, so they changed the size of the slices to make them appear to be the same size (or close to it) as before.

    The way I handled the reverse split in Quicken was that I deleted the downloaded transactions that I got from my broker -- that is, the transactions that were, essentially, "minus X old shares of VOD" and "plus Y new shares of VOD" --  and then I entered the transaction as a stock split using the exact numbers of shares, old and new, NOT rounded to the nearest whole share in either case.  For example, if you had 131.875 shares of VOD before the reverse split, you would enter that as the "old shares" in the stock-split dialog box, and you would enter 71.9318 as the "new shares" (131.875 times 6/11).  Based on this split ratio, Quicken automatically recalculates the number of shares in each lot and the per-share cost.  I then entered a sale transaction for the fractional share -- in this example, the 0.9318 share of VOD -- with the total sale amount being the amount of the cash-in-lieu for my fractional share (the amount from my brokerage transaction history), and thus I ended up with the correct number of whole shares of VOD, post-split.

    When you say your institution did not assign a value to the VZ shares that you received, are you referring to the downloaded transaction or to what actually appears in your account when you look at the shares in your account, on your broker's website?  In my transaction history in my brokerage account, Fidelity showed the transaction as a "distribution spin-off" of X number of shares of VZ, with no dollar amount associated with it.  However, when I look at the stocks in my account, I see those shares of VZ listed with a cost basis of $46.23 per share, and an acquisition date of 2/24/2014.  So, that is how I entered the transaction manually in Quicken: as "shares added", $46.23 as the "price paid per share," and 2/24/2014 as the "date acquired."

    If your brokerage shows the VZ shares that you received with some entirely different cost basis, please do reply to this post!  I'd be very curious about the reason why, especially if it's possible that my broker made an error (unlikely as it seems).

    In all of the above, I've assumed you received the VZ shares in a taxable brokerage account, not in a 401(k), IRA, Roth IRA, etc.  I say  this only because I recall a time when, in my IRA accounts at Fidelity, Fidelity would assign a value of zero to shares that resulted from the reinvestment of dividends, on the (I assume) theory that it didn't matter since the receipt of dividends in such an account was not a taxable event.  If your shares are in one of these tax-advantaged account types, and your broker routinely assigns a zero value to shares you receive as a dividend in that account, that would explain it.
    • Thanks arudoff (and everyone!) - this is really good info.  I'm not a numbers person, so I'm trying to learn here.  In terms of investment performance analysis, it seems like VOD is being "punished" because it keeps it's original cost basis against substantially fewer shares, yet it doesn't get "credit" for producing new VZ shares (future cash payment remains to be seen)..  Would creating a post-split VOD cash dividend equal to the acquisition value of the new VZ shares, and then buying (instead of adding) new VZ shares be a better way to go?
    • In the theoretical sense, if Verizon had paid 100% cash to Vodafone for Vodafone's 45% share of Verizon Wireless, and then Vodafone paid a large special dividend, all in cash, would you look at this transaction differently?  Remember, Vodafone is now a smaller company, and will no longer receive its share of dividends paid by Verizon Wireless.  Conversely, if Vodafone had sold its 45% stake in Verizon Wireless for all cash, and did not pay out any special dividend -- perhaps to keep cash for some huge acquisition -- then the company's value might not have changed much (of course, a big pile of cash on the company's books does not earn much of a return compared to the company investing that cash in a capital project or acquisition).

      If you were to create a post-split cash dividend equal to the value of the VZ shares you received, and then use that cash in Quicken to "buy" the VZ shares, I would think you'd still come up with the correct aggregate value for the VZ shares, but I don't know what it would do to the value of your VOD shares.  My priority has been to make sure that my Quicken records, as to cost basis, number of shares in each lot, etc., reflect what my brokerage account shows, so there's no discrepancy; because of the fractional share of VOD that resulted from the split, and which was sold, I had to make small adjustments to the amount of shares in each lot of VOD in order to match what my broker displayed for each lot.   And, of course, regardless of how you treat it in Quicken, what will matter, for tax purposes, is how your broker reports it for your tax-reporting (i.e., Form 1099-DIV).  Generally, a brokerage doesn't arbitrarily decide that something -- for example, the VZ shares that we received -- is a dividend, as opposed to, say, a return of capital or a tax-free spinoff.   The company that makes the payment -- in this case, VOD -- instructs the brokerage firms what the treatment is.

    arudoff wrote:  "to take your last questions first, I haven't found a way for Quicken to show the VZ stock distribution as a dividend on VOD."

    To me, the clear path is to take the dividend as 100% cash from VOD, then buy the shares of VZ received with part of that cash.  That purchase price might be the 46.715 I identified above; it might be the 46.23 arudoff reported Fidelity using; it might be some other value justifiable to the IRS.  The total dividend is also the value that VOD (or your broker) will report to you next year on your 1099-Div.  

    Div per share of VOD = value of VZ + cash = 46.23 * 0.263001 + 4.928005.

    Buy VZ Shares :: No. of VOD shares * 0.263001 @ FMV on 2/24 = 140 * 0.263001 @ 46.23

    Use consistent values for the bold underline value (46.23) whether that is 46.23, 46.715, or some other justifiable value.  I would fully expect VZ or VOD to come out with an sample presentation in the near future, in particular since they (VOD) are going to have to present the total Div value at some point.  Those of you in contact with them may want to ask that question.

    Looking at jeffkarr's situation, I see before the transaction:

    140 VOD @ $39.00 / share 2/21 closing FMV = $5460 market value.  Let's assume a basis for those shares of $30 / share = $4200.  He has a potential (unrealized) taxable gain of $1260.

    Immediately after the transaction 2/24/14, he has

    76.363636 shares of VOD @ 41.20 = $3146 at same basis = $4200

    36.82014 shares of VZ @ 46.23 = $1702.20 at basis = $1702.20

    Cash = 4.92805 * 140 = $689.92

    2/24/14 Market Value = $5538.12 for a gain of 78.12 (effectively the market change that took place on 2/24)

    He is also going to soon sell the 0.363636 shares of VOD and the 0.82014 shares of VZ bringing his holdings to 76 VOD and 36 VZ shares.  That is not immediately germane.  

    He now has a potential (unrealized) taxable loss on VOD of $1054, no gain or loss on VZ, and  immediate taxable (div) income of 2392.12.  To the extent the loss might be creditable against the income, there might be construed a taxable income of $1338.12.

    Stated another way and neglecting the ex-div date, if this shareholder had sold on 2/21, he would have had a LT cap gain of $1260 and $5460 in cash.  If the shareholder instead took the transaction and sold out for the indicated prices on the 24th, he would have $2392.12 in taxable dividend income, a $1054 LT capital loss, (at some level a net $1338 in taxable income) and $5538.12 in cash.  

    All in all, the position did not change much.  But note the dangers of mixing and matching various types of different taxable income.  YMMV.

    • thanks for using me as an example!
    • Good analysis of the overall position pre- and post-transactions!

    Thanks for the added details arudoff.

    Ref:  http://www.vodafone.com/content/index/investors/verizon-wireless-transaction/information-for-us-adr-... includes the following:

    How will I be taxed when I receive the Special Dividend if I am a US tax resident shareholder?

    • Your tax position will depend on your individual circumstances and you should consult your own tax advisers as appropriate.
    • The Special Dividend, which will consist of cash and the market value of the Verizon Shares when they are issued to you, will constitute a dividend for United States federal income tax purposes to the extent it is paid from Vodafone's current or accumulated earnings and profits.
    • Vodafone currently expects that its current and accumulated earnings and profits will exceed the amount of the Special Dividend, and, therefore, the entire amount of the Special Dividend will be treated as a dividend for United States federal income tax purposes, without any offset for your tax basis in your Ordinary Shares.
    • Further information about the tax position of shareholders in the US can be found in Part X (Taxation, Section 3, United States Taxation) of the Circular.
    I interpret (see footnote) that to mean the VZ shares and cash received are being treated as a dividend payout which would then lead me to 5 transactions:
    1. Div paid by VOD
    2. Buy shares of VZ
    3. Split shares of VOD
    4. Sell fractional shares of VOD (from split) for cash-in-lieu to be received
    5. Sell fractional shares of VZ (from buy) for cash-in-lieu to be received

    The Div by VOD would be the value of the VZ shares received plus the cash received.  On 2/24/14, VZ traded to a high of 47.20 and a low of 46.23 for an average price of $46.715 per share.  There are other ways to establish that price.  According to arudoff above, you are getting 0.263001 shares of VZ for every share of VOD you owned.  You are also getting (same source) $4.928005 per VOD share in cash.  That makes the total dividend value $17.214 per VOD share.  That would be my first transaction.  For jeffkarr1's holding of 140 VOD shares, that would be a Div of $2,409.97.

    I would then buy shares of VZ.  I would use the same value as determined previously ($46.715/VZ share) buying 0.263001 shares of VZ for each VOD share.  For the 140 VOD shares, that would be buying 36.82014 shares of VZ.  After this transaction, you should have cash in your account equal to the real cash received as part of the transaction ($4.928005 / VOD share).

    I would then sell the fractional shares (0.82014) for the cash in lieu amount.  That will likely be at a slightly different rate than the bought rate resulting in a small cap gains amount.  You will not know that amount until it shows up in your brokerage account.

    I would then split the VOD shares assuming arudoff's figures above are accurate at 6 for 11 (producing 76.363636 shares in Quicken for the initial 140 shares of VOD).

    Final transaction - sell the fractional VOD shares (0.363636) for the cash in lieu amount yet to be received.  In making this sale, check the VOD holdings shown by Quicken after the split to be sure you are selling the right fraction and the complete fraction.  After this sale, your VOD holding in Quicken should be an integer value.  Same caution applies to the sale of fractional VZ shares, through you, the user, has more control on that at the start.

    Because this is (apparently) being taxed as a dividend, I do not see any particular 'by lot' issues where multiple lots of VOD might need to be treated differently.  That makes the processing much simpler.  Pretty much each transaction stands on its own.  That also makes things easier to edit down the line later if you get newer, better information. 

    [Footnote:  I am not a tax adviser, tax pro, CPA, financial analyst, enrolled agent, IRS employee, or otherwise qualified to comment on anything.  Do your own due diligence.  Consult people you know and trust.]

    • In your example where there would be a taxable dividend of $2,409.97 if you receive that in the form of stock would that not be an increase to your allocated basis from the original vodafone share purchase?
    • Your question is not clear.  VOD is paying a special dividend in the form of (roughly) 30% cash and 70% VZ stock.  In my example above (there is a later example with numbers) and as I understand it, the full 100% value of the dividend is taxable to US shareholders as dividend income.  Part of that dividend (the 70% part) does become the basis for the newly distributed shares of VZ.  I see no adjustment to the basis of VOD shares.  (Note my closing footnote above.)
    • Just to expand a bit on what q.lurker said:  if your VOD shares are held in a taxable account (that is, NOT an IRA, 401(k), etc.), then the VZ shares that you received are a dividend for U.S. tax purposes, the dollar amount of which is equal to the number of VZ shares times $46.23 per share (VZ closing price on Feb. 24, 2014).  (This is per what Vodafone states in the Circular that was sent to its shareholders -- although they couldn't tell ahead of time what would be the VZ closing price, they stated that the VZ closing price on the date of the distribution of the VZ shares would be used to determine the dollar value for U.S. tax purposes.)   Your per-share cost basis in the VZ shares is $46.23, and your aggregate cost basis in the VZ shares is the number of shares times $46.23 (that is, the dollar amount of the dividend).  Your broker's records should reflect this, and this is what shows up as the per-share basis of my VZ shares in my broker's records.

      Because VOD paid a large dividend, due to the sale of a large asset (VOD's 45% stake in Verizon Wireless), VOD is now a smaller company.  VOD did a reverse stock split, which changed the number of shares you now own of VOD.  Your AGGREGATE cost basis in VOD is unchanged -- except for a deduction for the cost basis of the fractional share that resulted from the split, for which you received cash -- but your PER-SHARE cost basis in VOD is now higher.  The reverse-split ratio was 6 new shares for 11 old shares of VOD (6/11) -- this is the ratio announced by Vodafone, which you can find on their website under the section devoted to the Verizon Wireless transaction --  therefore your per-share cost basis for your new shares of VOD will be the old per-share cost basis times 11/6 (with a minor adjustment due to the removal of the cost basis of the fractional share).

      Example:  say you had 100 old shares of VOD with a cost basis of $26 per share, = aggregate cost basis of $2,600.  The reverse split gives you 54.545 new shares of VOD (100 x 6/11).  At this moment in time, before the fractional share is sold, your aggregate cost basis is still $2,600; thus, your per-share cost basis is $47.67 ($2,600 divided by 54.545 shares).  (I'm rounding dollars to the nearest cent and shares to the nearest 1/1000 of a share.) This is the same cost basis as taking the old per-share cost basis of $26 and multiplying by 11/6.  However, you received cash in lieu of the fractional share -- that is, what you actually own is 54 shares of VOD, and a small amount of cash.  Based on what I received for my VOD fractional share in one of my accounts -- $27.45 for 0.659 shares, which works out to a per-share selling price of $41.654 (I actually received a slightly different per-share amount, $41.69, for a fractional share I held in another account, so yours may differ also) -- in this example the fractional VOD share of 0.545 would give you $22.70 in cash (0.545 times $41.654).  Your cost basis in that 0.545 fractional share was  $25.98 (0.545 times $47.67, the post-split per-share cost basis), so you have a small capital loss ($22.70 sales proceeds minus $25.98 cost  = negative $3.28).  Since this fractional share of VOD was sold, your AGGREGATE cost basis for VOD should be your original cost basis of $2,600 minus $25.98 (the cost basis in the fractional share) = $2,574.02.

      When you receive the cash portion of this special dividend on March 4, that will simply be cash, so it will not affect your cost basis in your VOD shares.  (Even if you have previously had your VOD dividends automatically reinvested in VOD shares, the cash dividend to be paid on March 4 will not be automatically reinvested, as Vodafone has suspended its dividend reinvestment program for this special dividend only, as stated in the Circular.  Reinvestment of dividends will resume with the next regular dividend.)

      As with q.lurker, what I have said does not constitute legal, tax, or any other kind of advice.  I'm just using statements made by Vodafone in its Circular or on its website, regarding the various parts of the entire transaction.

    Thanks guys - this is really helping me to understand the mechanics of this deal (I think I'm about 80% there).  

    My brokerage account (Fidelity) updated last night to reveal a couple of things:  On my "Open Positions" screen,  VOD is shown at 76 share, but there is no new lot, so my cost basis remains the same and represents the purchase of 140 shares back in 2012.  The current holding thus appears as a big loss.  VZ was acquired yesterday 2/24 with a $46.23 per share cost basis.  There is also a small cash payout - for the fractional shares.   I'm assuming the larger cash payout part of the deal will appear in the coming days/weeks.

    This is how the deal looks on my "Transaction History" page:

    02/25/2014IN LIEU OF FRX SHARE LEU PAYOUT 92857W209#REORLM0050832950001 VODVODAFONE GROUP SPON ADR REP 10 ORD SHSCashAmount: $15.16

    02/24/2014REVERSE SPLIT R/S FROM 92857W209#REOR M0050832950001 VODVODAFONE GROUP SPON ADR REP 10 ORD SHSCashShares: +76.0000

    2/24/2014REVERSE SPLIT R/S TO 92857W308#REOR M0050832950000 92857W209VODAFONE GROUP SPON ADR REP 10 ORD USD0CashShares: -140.0000

    2/24/2014DISTRIBUTION SPINOFF FROM:(VOD ) VZVERIZON COMMUNICATIONSCashShares: +36.000

    I may have mucked up Quicken as I decided to delete the VOD transactions and do another download.  The only transaction to download was the 1:1.83  VOD stock split - leaving me 76.5027 shares.  Nothing downloaded showing a -140 VOD transaction. My new VZ shares did not download.   I'm assuming the 'dust is still settling.'

    • Sorry, the History formatting looked fine before hit the comment key.
    • The small down-pointing arrowhead in the upper right of your posts can be clicked to give you access to the "Edit" dialog to modify your post.
    • Thanks!
    • Just because Fidelity (or any brokerage) shows it one way and downloads transactions some way does not make that sequence right - for you or for any other specific user.  Thus editing, revising, or deleting the downloaded data is not unreasonable.  Personally, I would do what my due diligence suggests as correct and then just compare final results with the brokerage information.  

      If the treatment as a dividend is correct, I would expect your cost basis of VOD to stay the same as a result of this transaction.
    • I agree.  Just thought showing how my brokerage is reporting the elements of this deal might help in structuring the manual transaction input into Q.
    • Just a quick comment here--TDAmeritrade is showing this (the new shares of VZ) as a "nontaxable spin off/liquidation distribution." From what I understand (which may not be much), that means there are no tax implications to the spin off.
    • See my comment, above, about what Fidelity's tax dept. told me -- that the Verizon shares constitute a taxable dividend even though Fidelity's downloaded transaction calls it a spin-off.(this is also what Vodafone says it expects to be the case, in the Prospectus, page 95.). While I'm not a tax expert by any means, I don't see how this could be nontaxable.  Vodafone did not spin off any business or entity to its shareholders (unlike, for example, when Conoco Phillips spun off Phillips 66 directly to the Conoco shareholders or when Abbott Labs spun off AbbVie to the Abbott shareholders). Rather, Verizon bought from Vodafone the 45% of Verizon Wireless that Vodafone had owned, and Verizon paid partly in cash and partly in Verizon shares, with part of the cash and all of the Verizon shares going to the VOD shareholders.

      It's sometimes the case that how your broker characterizes a transaction when it happens -- like calling this a spinoff -- is not the way it will be treated for tax purposes.
    To forumuser:  after re-reading your post, I realized that the cash in lieu that you received was described by your broker as cash in lieu of a fractional share of Verizon, not Vodafone (the per-share price you included in your post finally clicked in my brain).  Pardon my error in referring to you having received cash in lieu of a fractional share of VOD.  As I write this (Feb 26), I have received cash in lieu of my fractional share of VOD, but not the fractional share of VZ.  I had assumed it worked the same way for everyone, but perhaps it depends on the brokerage firm.

      All the answers in this discussion have merit.  It would be helpful, but probably too logical, for someone in quicken tech to demonstrate how their dialog boxes should be used in this particular case,   This is certainly not a run-of-the-mill situation, but not that unheard of either, and requires more help than the anemic explanations, mostly parroting the prompts adjoining the blanks in the boxes, that are available in the program and online.

      • I read through all of this.  First let me say that I swear companies lay awake all night trying to figure out how to make the most difficult transactions for a person to book correctly (especially through Quicken)!  Second, I read through these posts, but if someone can "dumb them down" to a step-by-step process, it would probably be appreciated by us "dumb" people who have come here to try to figure out our brokerage statements and how to book the transaction.  Thanks to all who have posted!
      • OK, here goes nothing . . . just realize that I have no way of knowing how various brokerage firms have downloaded transactions to Quicken, except for Fidelity (my brokerage).  For the reverse split of VOD, the receipt of cash in lieu of the fractional share of VOD, and the receipt of the shares of VZ, I did not use the downloaded transactions from Fidelity -- I deleted them, after copying the details just in case.

        Initial facts:  VOD has declared and paid a special dividend, consisting of cash and shares of Verizon, and also did a reverse stock split.   The cash portion of the dividend has not yet been paid (supposed to be paid on March 4).  Vodafone stated, in its Circular that was sent to its shareholders, that it expects that the entire amount of this dividend (both cash and VZ stock) will be treated as a dividend for U.S. tax purposes.  (Consult your own advisors.)  Vodafone also stated that the value of the distribution of VZ shares, for tax purposes, will be the closing price of VZ on the date of distribution.

        Pre-split number of shares of VOD = 112.875 (this is a hypothetical number).  Reverse split ratio is 6 new shares of VOD for 11 old shares of VOD, therefore the number of new VOD shares to which you're entitled (before removing the fractional share) will be 112.875 x 6/11 = 61.568.  (I go to three decimal places because that's what Fidelity did).  Entitlement to VZ shares is 0.263001 shares of VZ for each pre-split share of VOD, thus the number of VZ shares (before removing the fractional share) will be 0.263001 x 112.875 = 29.686.  

        Step 1:  Transaction date Feb. 24, 2014 -- reverse split of VOD:  in Quicken, in your brokerage account register, enter a transaction as a "stock split."  The security name is Vodafone.  "New shares" = 61.568.  "Old shares" = 112.875.  (Your brokerage may have shown only whole shares for VOD and VZ in the downloaded transactions; don't use these numbers.)  You don't need to fill in the "price after split" box.  When you hit "Enter," Quicken will automatically recalculate the number of VOD shares in your account, including for each separate lot of shares (this will also automatically adjust your per-share cost basis, but your total cost basis will not change until we deal with the fractional share).  If you then look at the holdings in your account, you should have 61.568 shares of VOD.

        Step 2:  Transaction date Feb. 24, 2014 -- receipt of VZ shares: On this date, only whole shares of VZ were distributed, not fractional shares.  So, enter a transaction in Quicken for the 29 VZ shares.  There are two ways you can do this: (a) Enter a transaction for "Shares Added" (this adds shares without affecting the cash balance in your account).  The security is Verizon.  The number of shares is 29.  The price paid per share is $46.23 (the closing price of VZ on Feb. 24).  The "date acquired" is Feb 24, 2014.  Quicken will calculate the total value (29 x $46.23 = $1,340.67), which you should be sure to include in any numbers you use to estimate dividend income for 2014 tax planning purposes (if your shares are in a non-taxable account, such as an IRA, you don't need to worry about this).  (b)  The other way to record this is as if you had received a cash dividend from VOD in the amount of $1,340.67, and then to enter a second transaction to "buy" 29 shares of VZ at $46.23 per share (with no commissions or fees).  Either way, your cost basis in the VZ shares will be $46.23 per share, or $1,340.67 in total. Note: your brokerage should show the same per-share cost; if it doesn't, ask why!

        Step 3:  Transaction date --- the date on which you received the cash in lieu of the fractional share of VOD, which apparently has varied among various brokerage firms.  For me, it was Feb 25.  From my brokerage records, I could see how much cash I received for the fractional share of VOD (0.568).  The amount was $23.66.  In Quicken, enter a "Sell- shares sold" transaction.  The security is Vodafone.  The number of shares is 0.568.  The "total sale" amount (at the bottom of the dialogue box) is $23.66.  Quicken then calculates the per-share selling price as $41.65.  (I had to do it this way because Fidelity did not show a per-share price for this cash-in-lieu transaction.)  After you hit "Enter," the number of shares of VOD in your account will now be a whole number, namely 61.  Your total cost basis for VOD should now be slightly less than before these transactions, because when you sold the fractional share Quicken removed the cost basis for that fractional share (and your broker should have done the same).

            Note: if you care about "specific lot" identification when you sell shares in Quicken, or if you have numerous lots of VOD shares and you want the number of shares in each lot in Quicken to match your broker's records, I will make a separate post to deal with that.

        Step 4:  Transaction date -- the date on which you received the cash in lieu of the fractional share of VZ.  For me, it was Feb. 27.  Since it is cash, this is the easiest part -- just enter it as a cash dividend received (and not reinvested) from VOD, or, if your brokerage firm's downloaded transaction shows it as a dividend, you can keep the downloaded transaction instead of deleting it.  (Note: since you never owned the fractional shares of VZ, unlike the fractional share of VOD, don't enter a sale transaction for the fractional VZ share.)

        Step 5:  Transaction date to come -- supposedly March 4: you should receive a cash dividend from VOD of  $4.928005 for each pre-split share of VOD.  In this example, it would be $4.928005 x 112.875 = $556.24 (I assume that they will round down to the nearest cent).  Your brokerage will likely show this as a dividend transaction, so you will probably be able to just use the downloaded transaction rather than having to enter it manually.  Note:  this VOD cash dividend will not be automatically reinvested in shares of VOD, even if you have that instruction in your brokerage account, because Vodafone has suspended the dividend reinvestment program for this special dividend only.
      • A bit more about the cost basis of the "new" VOD shares in Quicken:  if you have more than one lot of shares of VOD in an account, and if, like myself, you want to be sure that the number of shares in each lot and their cost are the same in Quicken as in your broker's records, you might need to make an adjustment when you do the step to "sell" the fractional share of VOD.  In the "Sell -- shares sold" transaction box (Step 3, above), you may need to select the "Specify lots" box and then choose from which lot or lots you will sell the fractional share.  When I first entered the sale of the fractional share, I selected "specific lots" and assumed that the fractional share was removed from the most recent lot.  When I looked at my lots of VOD shares in Quicken and saw that they did not match what my broker showed (each lot was off by a tiny amount), I realized that my broker had treated the sale of the fractional share of VOD as having been apportioned among ALL the lots (that is, the fractional share was not subtracted just from the oldest lot, or from the most recent lot).

        I don't know if other brokers will do the same.  What I did was to compare the number of shares in each lot of VOD as shown in my broker's records to the number of shares in each lot as shown by Quicken.  Then I went back to the "Sell -- shares sold" transaction for the 0.568 fractional share of VOD and edited it: I selected "specific lots" and then, in the next screen, I apportioned that 0.568 share among the lots so that each lot (in Quicken) was reduced by the amount needed to match the number in my broker's records -- making sure that the total number of shares "sold" at the bottom of that dialogue box added up to 0.568.

        Whew!
      • First comment:  
        arudoff wrote:  "Vodafone also stated that the value of the distribution of VZ shares, for tax purposes, will be the closing price of VZ on the date of distribution."

        What I see in the Vodaphone circular (http://www.vodafone.com/content/dam/group/investors/downloads/vzw/circular_101212.pdf) are references to 'fair market value'.  Fair market value is or can be different than the closing price on a given day.  Apparently Fidelity is using closing price at this point for arudoff's holdings.

        What I now see on the Vodaphone website (http://www.vodafone.com/content/index/investors/verizon-wireless-transaction/information-for-us-adr-holders.yes.html) is this statement under Q&A for US shareholders:

        --What is the Fair Market Value of the Verizon Shares for tax purposes?
        --$48.115 based on the Verizon closing mid-market price on 20 February 2014.

        At this stage I am only trying to make sure the Quicken user is as knowledgeable and informed as possible.  

        Second Comment:  I would choose a different series of transactions than arudoff presented.  That is not to say hers are wrong, only different than what I would choose.  Since I will be using the $48.115 value from the indicated source, I will choose a different hypothetical - 100 shares of VOD.

        Transaction 1)  Enter a Dividend payment using Date = your choice - 2/21, 2/24, 3/4, other; Security = Vodaphone; amount = $1758.22; memo = relevant info of your choosing.  I arrive at the dollar figure as [ 48.115 * 0.263001 + 4.928005 ] x 100 shares of VOD.  That is the fair market value of the VZ shares received + the cash to be received.

        Transaction 2) Enter Buy Shares transaction using Date = your choice - 2/21, 2/24, other; Security = Verizon; Number of shares = 26.3001; Total Cost = 1265.43; memo = relevant info of your choosing.  Let Quicken calculate the price per share.  

        Transaction 3)  Enter Stock Split transaction using Date = your choice - 2/21, 2/24, other; Security = Vodaphone; New Shares = 6; Old Shares = 11; memo = relevant info of your choosing; price after split I would leave blank.  For the 100 share hypothetical holding this would result in 54.545454 shares of VOD in your account

        Transaction 4)  Enter Sell Shares using Date = your choice - 2/21, 2/24, other, date after the Transaction 2 above; Security = Verizon; Number of shares = 0.3001; Total amount = amount your brokerage reports to you as cash received in lieu of fractional Verizon shares; memo = relevant info of your choosing.  Let Quicken calculate the price per share

        Transaction 5)  Enter Sell Shares using Date = your choice - 2/21, 2/24, other, date after the Transaction 3 above; Security = Vodaphone; Number of shares = 0.545454; Total amount = amount your brokerage reports to you as cash received in lieu of fractional Vodaphone shares; memo = relevant info of your choosing.    

        Dates - The circular makes multiple references to this deal closing 2/21 and going ex-dividend 2/24.  Generally I would want the dates to mimic what I saw in by brokerage account, but that is the users choice.  The only real critical aspect is that the two Sell Shares for the fractional shares are dated after their related Buy or StkSplit transactions.  If you choose to delay the Div transaction until March, your account will likely have a negative cash balance for a few days.  No big deal (to me).
      • Just a note on the "value" of the Verizon shares -- Vodafone's statements on its website are inconsistent with each other.  One statement is that the Special Dividend will consist of "cash and the market value of the Verizon shares when they are issued to you" -- which was on Feb 24 -- while the other statement, the one quoted by q.lurker, says the fair market value of the Verizon shares was $48.115 on Feb. 20.  That date was NOT the date of the distribution of the Verizon shares.  Vodafone also says, on its website, that your tax basis in the Verizon shares will be equal to the fair market value of such shares on the date that the Special Dividend is received - - which was Feb 24.  So, the $48.115 number may be subject to change.  When in doubt, consult your own tax adviser.

        Also, the convention in referring to the "market value" of a stock for a given day is -- unless it is otherwise explicitly specified (such as being the average of the high and low prices on a given day) --  the closing price.  This is why I think the $46.23 number, shown by Fidelity, will turn out to be the correct one.  I would be very interested in hearing what other brokerage firms have shown as the cost basis of the Verizon shares.

        By the way, I'm not a "he" but a "she"!
      • Thank you both for the follow-through. Here's what I have so far:

        My brokerage, like q.lurker's, lists the VZ share value in the underlying transaction data as $48.1149 per share on February 20th. However, the brokerage also shows two other transactions: distribution (and receipt) of my VZ shares on February 24th, and the sale of the VZ fractional shares at a price of $46.8837 per share on the same date. Sigh.

        I have yet to receive confirmation for the sale of the VOD fractional shares. They are still included in my VOD post-reverse-split holdings.
      • Interesting!  How can your brokerage show a value for VZ shares on Feb. 20 when you didn't receive them until the 24th?  Do you mind disclosing who is your brokerage firm?

        I just looked at my Fidelity monthly statement for the month ended Feb. 28, and it shows the cost basis of my VZ shares as $46.23 per share.  While a lower cost basis (than the $48.115 value you have) could lead, in the long run, to potentially higher capital gains if I sell the shares, if the $46.23 is what Fidelity ultimately reports as the per-share value of the dividend on Form 1099-DIV, that will be a lower amount for 2014 income tax purposes.
      • After a conversation with Fidelity's cost-basis-reporting department, I have learned that, when there is a corporate action like this one (for VOD), the company -- Vodafone -- has to file a Form 8937 with the Internal Revenue Service to report the effect of the transaction(s) on cost basis.  The company has up to 45 days after the transaction to file this form (although they may do it sooner).  That will be the source of the definitive cost basis of the VZ shares for U.S. tax purposes.  According to Fidelity, that Form 8937 has not yet been filed.  Fidelity assigned the $46.23 per-share value based on information from a 3rd party service provider. (The Fidelity rep also said that this service provider is rarely incorrect -- but, who knows . . . )

        I have also communicated, both by email and phone, with Bank of New York (BNY Mellon), which is the administrator for the Vodafone American Depository Receipts (e.g., VOD) to inquire about the discrepancy of information on Vodafone's website regarding the date as of which the VZ shares will be valued for U.S. tax purposes, that is, is it Feb. 20 or Feb. 24?  The person I spoke with had not been aware of the discrepancy on Vodafone's website, and had no definitive answer.

        I guess we all just need to keep an eye out for possible revisions in our brokerage records.
      • > How can your brokerage show a value for VZ shares on Feb. 20 when you didn't receive them until the 24th?

        As your latest post states, I think we're pretty much looking at a moving target as far as valuation goes. What's important to me at this point is to define the process -- the numbers can, and obviously will, change when VOD files the appropriate paperwork. Until then, our costs are simply "best guesses," as are our institutions' valuations.

        On the other hand, I think it safe to say that we all have a better understanding of how to represent the overall transaction within the limitations of the software -- and for that I am grateful.
      • The Q&A for US Holders on the Vodafone investor relations site reports that the Fair Market Value of the Verizon Shares for tax purposes is $48.115 based on the Verizon closing mid-market price on 20 February 2014 (record date).  Do you know if this is correct?  Thanks.
      • See my posts, above.  The short answer is, we don't know yet.   To summarize:  Vodafone's statements on its website are inconsistent with each other.  On the one hand, they say that the tax basis in your VZ shares will be their fair market value on the date the Special Dividend is received (which was Feb. 24).  The also say that the Special Dividend, "which will consist of cash and the market value of the Verizon Shares when they are issued to you, will constitute a dividend for U.S. federal income tax purposes . . . (etc.)"  The Verizon shares were issued to us on Feb. 24.  These two statements are not consistent with using a Verizon share value for Feb. 20th -- especially since that was before the date on which Vodafone actually sold its 45% share of Verizon Wireless to Verizon.  (That sale date was Feb. 21.)

        My broker, Fidelity, has assigned a value to the VZ shares of $46.23 per share, which was the closing price of VZ on Feb. 24, as, essentially, a "placeholder" until the actual number is confirmed when Vodafone files the necessary Form 8937 with the Internal Revenue Service.  The following is a re-posting of what I said above:

        After a conversation with Fidelity's cost-basis-reporting department, I have learned that, when there is a corporate action like this one (for VOD), the company -- Vodafone -- has to file a Form 8937 with the Internal Revenue Service to report the effect of the transaction(s) on cost basis.  The company has up to 45 days after the transaction to file this form (although they may do it sooner).  That will be the source of the definitive cost basis of the VZ shares for U.S. tax purposes.  According to Fidelity, that Form 8937 has not yet been filed.  Fidelity assigned the $46.23 per-share value based on information from a 3rd party service provider. (The Fidelity rep also said that this service provider is rarely incorrect -- but, who knows . . . )

        I have also communicated, both by email and phone, with Bank of New York (BNY Mellon), which is the administrator for the Vodafone American Depository Receipts (e.g., VOD) to inquire about the discrepancy of information on Vodafone's website regarding the date as of which the VZ shares will be valued for U.S. tax purposes, that is, is it Feb. 20 or Feb. 24?  The person I spoke with had not been aware of the discrepancy on Vodafone's website, and had no definitive answer.

        I guess we all just need to keep an eye out for possible revisions in our brokerage records.
      • Thanks.
      • Vanguard reported the basis at $48.115.  I also read on some UK site that the price was based on a value leading up to the transaction date, and was irrespective of the "market value" on the 2/24 transaction date.  I guess over the coming months we'll be looking for "here's how to manage VOD/VZ in quicken".   Until then my basis in VOD remains unchanged, and my basis in VZ is "# shares x $48.115".    This substantially lowers my unrealized gain in VOD, and sets my unrealized gain in VZ to 0.  Basically my VZ shares were purchased with unrealized gains from VOD.

        Where it will get funky is when the 1099's come out showing VOD paid a "dividend" equal to the amount of "# shares x $48.115", which unfortunately converts my long-term gain at favorable tax rates into a DIVIDEND taxed at ordinary income rates.  Even if that happens, the basis I state above would not change.
      • as i understand it, at least the dividend will be a "qualified" dividend, which will help some.  if i end up selling something to help cover the tax cost of the transaction, i will probably sell vodafone.  even though it will not translate directly (capital gains (loses) - dividends), it won't hurt that the capital loss will offset other capital gains.  i am still naively (sp?) hoping that the $48.115 "fair value" might receive further review....but doubting it.
      • The elephant in the room - is VZ worth holding as an investment???
      • Or is VOD worth holding?  Any bets on whether AT&T will, eventually, make a bid?

        Seriously, back to the question of the value of the VZ shares: ultimately, the same dollar amount per share will be used to determine the cost basis of the VZ shares and the value of the portion of the dividend that was received in the form of VZ shares.  Vodafone had said, in its legal materials -- the Circular that was sent to its shareholders -- as well as on its website that "Your tax basis in the Verizon Consideration Shares will be equal to the fair market value of such shares on the date the Special Dividend is received ".  Well, the Special dividend was received on Feb 24 (at least, the portion in VZ shares was received that day; as we know, the cash portion was received later).  The website's mention of Feb. 20 makes no sense, in light of the quoted statement.  Indeed, on Feb. 20, Vodafone had not yet sold its share of Verizon Wireless to Verizon Communications (that occurred on Feb 21), and Verizon Communications had not paid to Vodafone the cash and VZ shares!

        Stay tuned for adjustments -- at least one of our brokerage firms is using an incorrect number for the VZ shares!!
      • arudoff point well taken.  march 10 was the target date for vod to make their payment on the payment on the fractional entitlement, so there are still things to settle.

      I did it a little differently but it worked for me.  I just recorded the tax basis of the verizon shares received as a dividend from Vodaphone(using the info from my brokerage statement), then purchased the Verizon Shares at the same  value as the dividend and lastly sold off the fractional shares(with notes on all transactions to explan what this was all about) . This got the taxable distribution and the shares on my records.

      • In my opinion, that is exactly the right way to handle the Verizon part of the deal.  Of course, you also have the cash dividend to record, and the reverse split for VOD and the fractional share sale (cash in lieu) for any fractional VOD shares
      I neglected to add:  I think, after doing calculations, that the payment in lieu of a fractional share that was received today (Feb. 25) was just for the fractional VOD share.  I multiplied VOD's closing price yesterday ($41.20) by my fractional share of VOD, and it came out pretty close (off by a few cents).  According to the Vodafone prospectus, the fractional shares resulting from the reverse split were to have been aggregated by the Depositary and then sold in the market to raise cash proceeds; the net proceeds of this sale (after deduction of expenses and commissions) would then be distributed.  So, the exact amount that we received per fractional share was likely not at the closing price on Feb. 24 but at some other (slightly higher) price for which the Depositary sold the shares that day.  Hope this clarifies things!

        I've been following this thread with interest, as I'm in the same predicament. So far I've just downloaded the brokerage transaction information, since accounting for all of this seems to be a work-in-progress (especially when there's supposed to be a cash payout in early March).

        Now, what my institution did was simply remove the VOD shares I own and then add the new, reverse-split VOD share amount, which seems a bit wonky because I've no idea what the cost basis for those shares would be. On the other hand, if I try to do a 6:11 reverse-split within Quicken, the cost basis pretty much doubles to reflect it.

        Here’s what my current online statement reads:

        02/21/2014 Exchanged Vodafone Group Plc Sponsored ADR Result of Reverse Split -500.00 shares
        02/21/2014 Exchanged to Vodafone Group Plc Sponsored ADR No Par Result of Reverse Split 272.72727 shares
        02/24/2014 Distribution Verizon Communications Stock Spin-off on 500 Shares of Vodafone Group Plc 131.00 shares
        02/24/2014 Cash in Lieu Verizon Communications Cash in Lieu of .5005 Shares at $46.8837 per share $23.47

        As far as the VZ shares go, I already have a position, so I'm considering just adding the shares from the spin-off at a different cost basis, since there doesn't seem to be a way to classify them as a VOD dividend. Problem is, I've no idea what that cost basis might be. Do I use the closing price, the average of the high and the low, or the 'in lieu' price of the fractional shares? Or, since this is a result of the spin-off and is in fact a dividend, is the cost basis actually zero? Yikes!

        The same holds true for the "new" VOD shares: what's my cost basis? The original price of my VOD shares? Closing price on Monday, February 24? Average of high and low? The inflated, reverse-split cost basis? Some other number? Sigh.

        Any help would be appreciated.

        • The cost basis of stock after a stock split is the original cost of the VOD when you acquired them. In this case, you own fewer shares of VOD now, hence your per share cost will increase.   In an ordinary stock split where you receive more shares (2:1) your per share cost will decease.
        • totally understand and u are correct.  That is the easy part.  The difficult part for some people is coming up with the cash to pay the taxes on the potentially huge dividend coming through  the VZ stock distribution. That is all taxable in 2014. Some people will have the cash to pay the tax and keep VZ. Others will need to sell a portion just to pay the taxes. And keep  in mind for those on social security the extra cash dividend and stock dividend from VZ will add to their taxable income and potentially push them into a higher medicare Part B premium!!
        • All too true, myronkau.  And since, at this point, we can't be sure what the per-share cost basis will be for the VZ shares for tax purposes, the decision whether to sell some of the VZ shares is made that much more difficult.
        • if you originally read the vod Q&A on the U.S. transaction, you will find that they added a one liner at the bottom indicating that the fair value of a verizon share is $48.115.  the primary transaction that occurred at my broker appears to be based on that number.  the way it was handled did not change my total vod cost basis, just the per share basis, but created a large dividend that will bite you, as myronkau noted, in non-tax sheltered accts.  i do not do downloads from brokerage accts, so i am unsure how quicken would handle them.  it took a while to do them manually, but i know i have an accurate reflection of the actual transactions.  remember though that one individual, who i.d.'d himself as a broker, indicated that the whole thing might be subject to change all the way into next year.  as an aside, i will probably take the capital loss in vod to pay the tax due - even though it will not offset the "dividend" (both cash and VZ stock) from vod.  candidly, i mistakenly thought the overall transaction would be a financial plus.  i was very wrong.
        • See my many comments on this topic, earlier.  My broker shows a $46.23 per-share cost basis for the VZ shares, which was the closing price on Feb 24., the day we received the shares.  The $48.115 per-share amount mentioned on Vodafone's website is stated to be the mid-market closing price on Feb 20 -- which is before we received the VZ shares and, indeed, before Vodafone closed on the transaction to sell its stake in Verizon Wireless to Verizon Communications (VZ) and, thus, before Verizon paid the cash and issued the shares to Vodafone.  Also, this $48.115 per share price is inconsistent with what Vodafone said, both in its legal materials (the Circular distributed to shareholders) and on the website  Q & A, that your tax basis in the VZ shares would be the fair market value of such shares on the date the Special Dividend is received -- which was Feb. 24.  My broker, Fidelity, told me that Vodafone has up to 45 days after the transaction to file, with the Internal  Revenue Service, a form that sets forth the definitive numbers.  Thus, the per-share cost basis of the VZ shares, which also will determine the dollar amount of the portion of the dividend that was received in the form of VZ shares, is not yet finalized.
        The cash payout in March will be the easy part -- just a cash dividend from VOD, and, at some point (supposedly no later than March 10), cash in lieu of the fractional share of Verizon that would have been owed to you when the Verizon shares were distributed to you.  (By the way, the special cash dividend from VOD will NOT be automatically reinvested in shares of VOD, even if you have that instruction in your brokerage account.  VOD's dividend reinvestment program is suspended, for this special dividend only, and will resume with the next regular dividend.  See page 25 of the Circular.)

        The Vodfone Circular (which I erroneously referred to as a prospectus) says that your tax basis in the Verizon shares that you received will be equal to the fair market value on the date of the Special Dividend (i.e., Feb 24).   Your holding period for those VZ shares begins on the following day.  (Page 96 of the Circular.).  The closing price of VZ was $46.23 on Feb. 24, and that is the per-share cost basis that my brokerage account shows.  Even if the downloaded transaction from your broker calls it a spin-off, the VZ shares that you received are a dividend and, if you received these shares in a taxable brokerage account, will be treated as a dividend for U.S. tax purposes.  As such, it may (depending on your holding period) be eligible to be treated as a "qualified dividend."  (See Circular, pages 95 - 96.)

        The aggregate cost basis of your VOD shares after the reverse split is the same as the aggregate cost basis before the split, adjusted for the "sale" of the fractional share of VOD (for which you received the cash in lieu).  Your broker's records should reflect this for each individual lot of shares.   So, since it was a 6 - for - 11 reverse split, your per-share cost after the split should be the before-split price times 11/6.

        The "sale" of the fractional share of VOD will result in either a short - or long-term capital gain or loss (depending on your holding period and your cost basis in that fractional share). (See the Circular, page 96.).   My brokerage account shows it as short-term.   Your brokerage will do the calculations for you.

        Hope this helps!

          > I have received cash in lieu of my fractional share of VOD

          Did they assign a value as they did with my VZ fractional shares?

          > Pardon my error

          No need -- I understood your overall point and appreciate the time you've taken.

          > Hope this helps!

          Indeed it does.

          As you say, the anticipated VOD cash payout in March is pretty straightforward -- I can treat it in Quicken as a simple cash dividend, and can do the same with the cash from the VZ fractional shares (which was paid on the 24th) and the cash from the VOD fractional shares when it is distributed (at some point before March 10th).

          Where things get a bit murky for me is when I try to assign a cost basis to both the new VZ stock and to the adjusted VOD shares, so let's see if I've got this right:

          > equal to the fair market value on the date of the Special Dividend

          By the fair market value of VZ on the 24th, they mean the closing price of $46.23? If so, this would be my per share cost basis for the 131 shares of VZ I received on that date? I ask this because my institution did not assign a value.

          > your per-share cost after the split should be the before-split price times 11/6

          I understand this in principle. However, does the "before-split price" mean my original cost basis for 500 shares of VOD, or the closing price of VOD on the date of distribution of the reverse-split shares?

          In either case, since the value of the VZ stock dividend is absent from the post-reverse-split VOD cost basis and does not, therefore, adequately offset the new, higher cost basis for VOD, Quicken will show what amounts to a substantial loss and a negative overall return on the VOD shares, which seems wrong, somehow. Unless there's a way to have Quicken acknowledge the VZ stock distribution as a VOD dividend? Do you know if there's there a way to do this?

          • My answer appears somewhere above -- I wrote it as "contribute an answer" rather than a "comment" after your questions, and didn't realize that makes a difference where it appears.  Sorry!
          • I have copied and pasted my latest answer (about an hour ago) below, so it should now appear in the correct order after your questions.

            To forumuser:  to take your last questions first, I haven't found a way for Quicken to show the VZ stock distribution as a dividend on VOD.  When I tried entering a transaction as a non-cash dividend, there wasn't an option to have the dividend be "paid" in a different company's stock (VZ) than that of the company paying the dividend (VOD).  I assume that Quicken's programmers didn't anticipate this kind of thing.  (I'm guessing that most of the occasions when the holders of one company's stock receive another company's stock, it's usually a merger, acquisition, or a true spin-off -- the last of these being when the shareholders of a company receive shares in a new entity that has been separated from the parent company.  Quicken can handle those types of transactions.  This VOD/VZ transaction isn't a real spin-off; if it were, then the VOD shareholders would have ended up with shares of Verizon Wireless or some such similar entity.  Rather, VZ now owns all of Verizon Wireless, and VOD shareholders own VOD without the 45% of Verizon Wireless that it used to own.)

            Yes, Quicken (and your broker) would show a substantial loss on the VOD shares, post-split/VZ distribution.  VOD shareholders now own shares in a company that is much smaller than it was before this transaction.  Of course, in an aggregate sense, you're not so badly off because you received a substantial dividend (the VZ shares plus the cash that is to come).  Here's another way to look at it:  when a company goes ex-dividend, theoretically its market value will drop by the amount of the dividend (in actuality, the change in value may be different due to other events in the market).  Why? Before the ex-dividend date, you have a share of stock that is entitled to the dividend; on the ex-dividend date, if you were to buy a share of the stock, you wouldn't get the dividend, so it is worth less than before it went ex-dividend.  We just got a huge dividend from VOD, and in return we gave up VOD's right to receive dividends from its share of ownership of Verizon Wireless.  If VOD hadn't done the reverse stock split, the market price of a share of VOD would have dropped substantially after the transaction.  They did the reverse split in order to make the price of a share of VOD, post-Verizon Wireless transaction, comparable to the price of a share of VOD before the transaction, and Vodafone's Circular says this.  (On Friday, Feb 21, the closing price of VOD was $39.00.) That's why the reverse-split ratio (6 new shares for 11 old shares of VOD) couldn't be announced until very shortly before the actual split occurred -- they basically started with the end result that they wanted to achieve (in terms of the VOD share price appearing to be stable, when viewed over time), and then calculated the split ratio that would get that result.

            I should have been more exact in referring to "before-split" and "after-split" prices regarding cost basis.  What I should have said is that your post-split cost basis per share of VOD should be 11/6 times your pre-split basis per share.  Your aggregate cost basis for VOD post-split should be equal to your aggregate cost basis pre-split, adjusted for the "sale" of the fractional share of VOD.  (My brokerage, Fidelity, calculated a cost basis for my fractional share of VOD and, thus, the short-term capital loss on that fractional share.).

            Here's another way to understand it: in a split, or reverse split, the number of shares you own changes, but you haven't received (or lost) any value (ignoring, for the moment, the fractional share piece).  If you bought 100 shares of Company X at $100 a share (total cost $10,000) and then it split 2-for-1, you'd own 200 shares, still with a total cost of $10,000, and thus your per-share cost would now be $50 -- half of the pre-split price.  The size of the whole "pie" (the value of the company) hasn't changed as a result of the stock split; it's just cut up into more slices.  In the case of VOD, the size of the "pie" (the value of VOD as an entity) HAS gotten smaller, not because of a split but because it sold its 45% share of Verizon Wireless, so they changed the size of the slices to make them appear to be the same size (or close to it) as before.

            The way I handled the reverse split in Quicken was that I deleted the downloaded transactions that I got from my broker -- that is, the transactions that were, essentially, "minus X old shares of VOD" and "plus Y new shares of VOD" --  and then I entered the transaction as a stock split using the exact numbers of shares, old and new, NOT rounded to the nearest whole share in either case.  For example, if you had 131.875 shares of VOD before the reverse split, you would enter that as the "old shares" in the stock-split dialog box, and you would enter 71.9318 as the "new shares" (131.875 times 6/11).  Based on this split ratio, Quicken automatically recalculates the number of shares in each lot and the per-share cost.  I then entered a sale transaction for the fractional share -- in this example, the 0.9318 share of VOD -- with the total sale amount being the amount of the cash-in-lieu for my fractional share (the amount from my brokerage transaction history), and thus I ended up with the correct number of whole shares of VOD, post-split.

            When you say your institution did not assign a value to the VZ shares that you received, are you referring to the downloaded transaction or to what actually appears in your account when you look at the shares in your account, on your broker's website?  In my transaction history in my brokerage account, Fidelity showed the transaction as a "distribution spin-off" of X number of shares of VZ, with no dollar amount associated with it.  However, when I look at the stocks in my account, I see those shares of VZ listed with a cost basis of $46.23 per share, and an acquisition date of 2/24/2014.  So, that is how I entered the transaction manually in Quicken: as "shares added", $46.23 as the "price paid per share," and 2/24/2014 as the "date acquired."

            If your brokerage shows the VZ shares that you received with some entirely different cost basis, please do reply to this post!  I'd be very curious about the reason why, especially if it's possible that my broker made an error (unlikely as it seems).

            In all of the above, I've assumed you received the VZ shares in a taxable brokerage account, not in a 401(k), IRA, Roth IRA, etc.  I say  this only because I recall a time when, in my IRA accounts at Fidelity, Fidelity would assign a value of zero to shares that resulted from the reinvestment of dividends, on the (I assume) theory that it didn't matter since the receipt of dividends in such an account was not a taxable event.  If your shares are in one of these tax-advantaged account types, and your broker routinely assigns a zero value to shares you receive as a dividend in that account, that would explain it.

          Thanks to everyone for who has contributed their time to what has been a very useful discussion, and thanks also to the original poster, jeffkarr1, for creating a forum for it!

          Although I will probably wait for the actual numbers from my institution, I'll probably end up with a combination of both q.lurker's and arudoff's suggestions. I like q.lurker's idea of entering the whole of the VOD dividend amount first and then "buying" the VZ stock from it, primarily because it gives full weight to value of the overall return in the VOD position. Sure, VOD will still show a loss as a result of the reverse-split, but at least there's some "credit where credit's due," and this is somehow satisfying to me. And I'll use arudoff's solution for the reverse split by using the exact share amounts. Again, this is somehow "right" to me. The rest is clean up: selling the fractional shares and plugging in actual values when they're finally provided.

          What I will do, however, is publish these institutional values in the thread when I get them, since it might be interesting to compare them between us. For instance, my institution sold the fractional VZ shares on the 24th for at $46.8837 per share. I've yet to see anything from the sale of the VOD fractional shares, nor have I seen what values were assigned to the VOD pre-reverse-split shares or to the VZ shares when they were distributed on the 24th. Then, of course, there's the final VOD cash payout sometime in March.

          • See my response to q.lurker's response, above, to gspie10008, for an example of calculations showing the effect on the cost basis in VOD after the reverse split and sale of fractional VOD share.  

            I have now received the cash for my fractional shares of both VOD and VZ.  I originally had VOD shares in two separate accounts at the same brokerage -- a taxable account and a Roth IRA -- so I've been able to calculate the per-share selling price of VOD and VZ in each account, and they're slightly different.  In one account, my fractional share of VOD was sold at a per-share price of $41.65; in the other, it was $41.69.  In one account, my fractional share of VZ was sold at a per-share price of $46.32; in the other, it was $46.34.  (I've rounded the per-share prices to the nearest cent, but I assume that the brokerage firm would carry it out to some greater number of decimal places -- but, ultimately, the brokerage can only pay you cash to the nearest cent, so some rounding is inevitable).

          Likewise - thanks to all!

          I've been noodling in Q this morning, and I think the following transaction entries will solve my issues about post-split VOD appearing as a performance 'loss.'  due to applying the original cost basis against the lower share number.  (Below is in broad strokes - exact share prices and fractional shares ignored)

          Following the VOD stock split transaction, I performed a 'return of capital' transaction in the amount of the acquisition price of the VZ shares.  This had the effect of Q adjusting the cost basis of the post-split shares so VOD no longer shows as a loss. (And in running an Investment Performance report, the return of capital gives "credit where credit is due.")

          Next transaction I just changed VZ  from 'shares added' to 'buy'.

          Here's what it looks like in round numbers

          2/21 Pre split:  140 shares VOD:  market value $5460, cost basis $4122, gain 32.5%

          2/25 Post split:  76 shares VOD:  market value $3126, cost basis $2442, gain 28%

                                      36 shares VZ:  market value $1667,  cost basis  $1665

                                       Cash payout is pending.

          • As long as you don't rely on your numbers from Quicken to do your taxes!!  (If you sell any of your VOD shares in the future, and if your VOD shares are in a taxable account, your cost basis in the shares sold, and thus your gain or loss on the sale, will not be correct in Quicken.)
          • Good point.  I didn't consider the tax implications as my holdings are in an IRA.  So you are saying that the original cost basis holds when determining gains/losses in a future sale of VOD?
          • In an IRA,  you're right, there aren't tax issues resulting from this entire transaction.  I prefer to have my Quicken numbers be the same as my brokerage reports, so that, many years from now when I may not recall the exact details of this transaction, I won't be wondering what went wrong if I compare the cost basis of my VOD shares in Quicken to what my brokerage account records show.

            Still, even in an IRA, your broker will have (or should have) shown that your aggregate cost basis in your VOD shares, post-split, is the same as the pre-split basis, minus the cost basis of the fractional share sold.  I have copied the hypothetical example I gave above:

            Example:  say you had 100 old shares of VOD with a cost basis of $26 per share, = aggregate cost basis of $2,600.  The reverse split gives you 54.545 new shares of VOD (100 x 6/11).  At this moment in time, before the fractional share is sold, your aggregate cost basis is still $2,600; thus, your per-share cost basis is $47.67 ($2,600 divided by 54.545 shares).  (I'm rounding dollars to the nearest cent and shares to the nearest 1/1000 of a share.) This is the same cost basis as taking the old per-share cost basis of $26 and multiplying by 11/6.  However, you received cash in lieu of the fractional share -- that is, what you actually own is 54 shares of VOD, and a small amount of cash.  Based on what I received for my VOD fractional share in one of my accounts -- $27.45 for 0.659 shares, which works out to a per-share selling price of $41.654 (I actually received a slightly different per-share amount, $41.69, for a fractional share I held in another account, so yours may differ also) -- in this example the fractional VOD share of 0.545 would give you $22.70 in cash (0.545 times $41.654).  Your cost basis in that 0.545 fractional share was  $25.98 (0.545 times $47.67, the post-split per-share cost basis), so you have a small capital loss ($22.70 sales proceeds minus $25.98 cost  = negative $3.28).  Since this fractional share of VOD was sold, your AGGREGATE cost basis for VOD should be your original cost basis of $2,600 minus $25.98 (the cost basis in the fractional share) = $2,574.02.

            I checked the calculations that actually occurred with my VOD shares, some of which are in a taxable account and some of which are in a Roth IRA, and they tally with the hypothetical example above.
          • We'll await arudoff's answer, but I think the post-split cost basis is your "new" cost basis. So, if your original cost basis was X, your new cost basis is X*6/11. In this case, if you sold your VOD today, you'd show a loss -- despite the more or less equal value you've received from the VOD special dividend of VZ shares and cash.
          • Yes, I see.  I guess another way of looking at it is that since the distribution (VZ and cash) is a taxable event this year, keeping the original basis on VOD raises the threshold for what will be considered a taxable gain in the future - somewhat offsetting the taxes already paid.
          • jeffkarr1 wrote:  "I think the following transaction entries will solve my issues about post-split VOD appearing as a performance 'loss.'  due to applying the original cost basis against the lower share number."

            It is not a matter of the lower number of shares or the reverse split.  You had a valuation of about $5500, all in VOD shares.  After the transaction, you still had $5500, but now it is in three parts: cash, VOD shares, and VZ shares.  The same Investment performance figure will come about if you process the full dividend as a dividend.  A RtrnCap is not the proper Quicken transaction for this event.  Do not be be mislead by seeing a current negative Gain/Loss on VOD.  The Gain/Loss only tells part of the picture - and that concept applies across all your holdings.  

            Another simplistic explanation - you bought stock worth $5500.  The company gave you $2400 cash.  Now other investors are not willing to pay you $5500; they will only pay you $3100 since they are not eligible to get that $2400.  Thus, you have a loss on the value of your shares - but not a loss overall.  

            That is why the investment performance report information (Average Annual Return, or Internal Rate of Return) is a much better measure of investment performance than the more limited Gain/Loss% or ROI.  AAR (aka IRR) captures the bigger picture much more effectively.
          • Q.lurker is right that this is not a return of capital transaction.  A return of capital transaction would only be appropriate to the extent that the amount of the VOD special dividend (cash plus VZ shares) were to exceed VOD's current and accumulated earnings and profits.  Since VOD stated that it expects that its current and accumulated earnings and profits will exceed the total amount of this dividend, thus the entire amount of the special dividend will be treated as a dividend for U.S. tax purposes (page 95 of the Circular).
          • Forumuser wrote:  "... if your original cost basis was X, your new cost basis is X*6/11."

            I am going to say No that concept.  If your original cost basis was $X (total, not per share), your new total cost basis is $X less a little bit (the cost basis of the fractional share taken as cash-in-lieu).  Cost basis per share is not very meaningful (to me) and I find it confuses the issue.  If one insists, then if your original cost basis was $Y per share (say $40/share), then now it is a little less than $Y*11/6 per share (about $73/share).  $40 x more old shares ~= $73 x fewer new shares.
          • To forumuser:  see my hypothetical example above, showing how the aggregate and per-share cost basis of VOD is affected by the reverse split and the payment of cash in lieu of the fractional share.  Your aggregate cost basis in VOD, post split, equals the pre-split aggregate basis minus the cost basis of the fractional share that was sold.  Your per-share cost basis, post split, is equal to your pre-split per share cost times 11/6 (with the very minor adjustment for the sale of the fractional share).
          • Excellent - I see it now.  I'll change the RtnCap to Div
          • The only reason I track per-share cost basis is because I have numerous lots of VOD shares, acquired at various times and through reinvested dividends.  So, at least in my taxable account, I need to know the per-share cost in each lot  so that, if I sell any shares in the future, I can decide from which lot or lots the sale will be made (for example, choosing to sell the highest-cost lots first to minimize capital gains or to maximize capital losses).
          For detailed instructions on how to enter these transactions in Quicken, see my response in the "Comments" section under "toothmaven's" post.  (I am not affiliated with Quicken in any way, but the way I handled the transactions resulted in the correct numbers that match my broker's records of how many shares of VOD and VZ I now own, plus the cash in lieu of the fractional shares of VOD and VZ, and the cost basis of the VOD and VZ shares.)

            I have a great deal of respect for the folks at costbasis.com.  They almost always get it right, and when they don't get it the first time, they correct their data.  In this case, they are treating this as a spinoff - a taxable spinoff.  I believe they have the numbers right.  Something might change when the 8937 is released.

            See:  http://www.costbasistools.com/spinoff/calculator.php  Make the 'Verizon' selection in field 1.  Fill out your specific information (Fields 8, 9, and 10). You should not have to change any other fields.  Click Submit and you should get the right (as known right now) data.  Read and understand all the information carefully.  This site or these values will not tell you how to enter the transactions in Quicken, but information does provide you with independent backup for you to check against - to check your Quicken results or to check your brokerage information.  

            HTH

            • there are a lot of numbers floating around.  the final answers are most likely yet to come.  a couple of numbers have been slightly mispresented - or seem to be.  vodafone added a one-liner to the end of its section "question and answers for US Holders".  they said the "verizon fair value as of feb 20 is $48.115.  they did NOT say fair "market" value.  if you elect to use that number for your per share cost basis, note that could have a significant when you calculate the value of your verizon shares for reporting purposes.  

              on feb 24, vodafone reported the estimated "midclosing price per verizon share was $45.965, not $46.715 and not $45.965. it may also be that those numbers have meaning for different transactions, such as the two payouts for fractional shares.

              best to wait for a final statement from vodafone on the verizon per share value for your cost basis.  no big hurry - we are screwed from a taxation perspective on anything not in a tax sheltered account anyway.
            • And since this transaction in the VZ shares was not a spin-off -- it was a dividend paid by VOD in the form of VZ shares -- I'd look askance at any site claiming to have the correct numerical answer based on the concept of a spinoff.
            • I note that the website costbasis.com shows a "spinoff" date of Feb. 20, which is not correct.
            • agreed - i think i can just wait on any quicken entries other than the 6/11 split
            • out of curiosity - did anybody determine what per share value/cost basis was assigned to verizon shares by costbasis.com??
            • @robertflowers31:  costbasis.com is using the value of 48.115/VZ share as shown in their field 12.
            • that ($48.115) was my guess, and right now, i hope that turns out to be wrong at least for the short term.  still going to wait to enter that (the verizon shares) transaction.  part of the reason is that the last time i entered a transaction in quicken that involved reinvested dividends and a spinoff, i did it wrong and had to delete every related transaction in multiple accounts.  takes too long, and i do not know a shortcut.
            • oops - i mistyped a number above, but it will still make no difference.  vodafone will finalize it.
            • Costbasis.com's calculations also show that you have a cost basis in the fractional share of VZ (for which you received cash in lieu), and that's just not correct.  Unlike the cash in lieu for the fractional share of VOD that resulted from the split -- i.e., a fractional share that you did own before you received the cash in lieu, and for which you have a cost basis because you already owned VOD before the split -- you never owned the fractional share of VZ.  You were only entitled to it, and instead received cash, and thus you have a zero cost basis in the fractional share of VZ (in other words, the cash received in lieu of the fractional share of VZ is a short-term capital gain).
            • i cannot comment intelligently  on that.  right now, i would assume that i would still have to apply a cost basis to that fractional share, because it was a part of the original distribution........but i won't know until i view tdameritrade's little section that tells me what they will report, and i have not done that.
            • Fidelity shows the fractional share of VZ as having a zero cost basis, while the fractional share of VOD IS shown with a cost basis.  Last year, when Abbott Laboratories (ABT) spun off AbbVie (ABBV), since no fractional shares of ABBV were distributed in that spin off -- we received cash in lieu of the fractional share -- the fractional share was also shown as having a zero cost basis.
            • arudoff wrote:  "Costbasis.com's calculations also show that you have a cost basis in the fractional share of VZ (for which you received cash in lieu), and that's just not correct.  ..."

              The presentation by costbasis.com is absolutely correct.  Any cash-in-lieu amounts received in these type of transactions are considered sales of the fractional shares and thus subject to capital gains calculations.  The amounts are always small enough that I can't imagine the IRS caring one way or another, but what costbasis.com is showing and what I have suggested in all my posts on this discussion (taking in the fractional shares and selling them) is absolutely the right way to do it.  

              ref:  http://wiki.fool.com/How_to_Report_Cash_in_Lieu_on_Schedule_D
              (I chose not to follow through with or cite other supportive independent discussions)
            • There's a difference between cash in lieu of a fractional share resulting from a stock split of a stock you already own, and receiving cash in lieu of a fractional share of a company whose stock you receive as the result of such actions as a corporate spin-off, i.e., where you receive stock in a company that was previously part of the former, larger company (such as AbbVie having been part of Abbott Labs).  Verizon Communications (VZ) was not a part of Vodafone (VOD), and the VZ stock we received was not a spinoff.  Keep in mind that we received a dividend from VOD.  Part of it was paid in cash, and part in VZ shares.  Since they only distributed whole shares of VZ, you received cash to make up for the fractional entitlement to VZ -- thus, the entire amount of cash you received in lieu of the fractional VZ share is taxable income, on a share you never owned (and in which you had no cost basis or, put another way, a cost basis of zero).
            • arudoff - lurker - sorry, i do not know, but i will let the broker tell me.  as noted, the $ amt from the sale of fractions is too small to be much of an issue.  on my using the broker's numbers - not long ago oneok spun off one gas, and i asked my broker a question related to the percentages used to establish the new cost bases.  the broker was using percentages that were NOT the same as those distributed by the company..... and even after i noted that to them, they would not change.  i forget from where they got their numbers.
            • arudoff - i love it.  looks like we just get screwed out of a few more pennies.  as an aside, my wife has reminded me that although i might be thoroughly enjoying all of this, it "ain't" putting any bread on the table.  best to all
            • I'm using my broker's numbers, too.  Two years ago, when Conoco Phillips (COP) spun off Phillips 66 (PSX), and, again, no fractional shares were distributed, the cash in lieu of the fractional share was treated as having a cost basis of zero, thus being a short term capital gain (obviously, a small one).  That is what Fidelity reported on the tax forms I received for 2012; the 2013 tax form treated the fractional share of AbbVie the same way.
            • Best to you too!
            • Guys and any gals on this thread--relax. You are all very smart. But It is what it is. The actual numbers may change slightly. There is nothing you can do about this until late this year and actually early next year when the 1099-DIv is issued. Hopefully the smart people at VOD and VZ will figure this out--or their law firms. Stop calling your brokers. They are clueless. They are salespeople. They would not know a reverse stock split from a double play.   And your tax advisor will not know either. I am one of them and I advise you to wait until next year.  The major factor is that you are not doing very well with this sale by VOD. You had a nice cushy unrealized gain in VOD. Now you will need to set aside dollars to pay tax on the cash dividend received yesterday or the day before and set aside real dollars to pay for the VZ dividend. Yes it is qualified dividend. Unless you are  big player it will be at 15% Federal and whatever your state tax rate is.  If you consider the immediate outflow of tax dollars early next year you will probably be ahead economically by a few dollars after all is said and done (assuming the share prices remain exactly the same as they are today)
            • Of course, this set of transactions has turned an unrealized capital gain on VOD into an unrealized capital loss.  That may be of some use should one decide not to hold onto the VOD shares.
            • Don't forget that you are also getting the $4.93 cash / VOD share in addition to the value of the VZ shares - a total payout of about $17+ per VOD share.
            • Funny. I actually still have gain on VOD even after the reverse split and the fact that my fair market value has decreased. I have had it a long time. It had a good dividend!!
               I did the math on spread sheet and in my case with 637 pre-sale shares of VOD acquired over many years (now reduced to 347) I have 167 VZ worth about $8000 on February 20. I also now have $3140 in cash dividend. I compared liquidating my original 637 shares of VOD with my low basis as if nothing had happened to liquidating my current position after paying income taxes on the cash dividend  and stock dividend. In my case I was about $300 ahead with the new VOD-VZ situation. Big deal on approximately a $23,000 FMV investment in VOD in mid February!!  Not worth any of this confusion plus I need to reinvest the net proceeds of the cash dividend after I pay my income taxes on it.
            • see my answer sent one minute ago.
            • Congrats, myronkau!  Others who have posted in this lengthy thread referred to their VOD shares now showing a loss on their brokers' records, obviously purchased at higher prices than yours.  Vodafone did say, somewhere in the Circular, that they expect to raise the next regular dividend by 8% (I think), so it could still be a decent longer-term bet.  Nothing expresses management's confidence better than a cash dividend boost!
            • It's a bit of a wash, really, or perhaps a bit better. We'll clearly need to wait for VOD to file its Form 8937 to have any hard numbers, but, in my case, the VOD special dividend (based on an assigned $48.12 "fair value") is worth a little over $8,700 in cash and VZ stock -- less taxes, of course.  Currently, my VOD position shows an unrealized loss of about half that, plus a small unrealized loss on the distributed VZ shares. For the moment, I'm just going to ignore the fractional share nonsense, since I'll either show a very small short-term loss, or a very small short-term gain -- depending on the valuations.

              I suppose a bigger issue is -- as others in this thread have touched upon -- what to do with the results. I find I've now an appreciatively reduced position in VOD (with a concomitant reduction in dividend), and, on the other hand, I've a larger position in VZ with its almost 5% current yield.
            • Diversify!
            • point well taken - don't laugh, but a few years ago i went to american tower, now a REIT - awash in debt but fairly dominate internationally.  i know that is a digression from the original questions - just threw it out there
            • Part of the reason I originally bought VOD was the company's stake in Verizon Wireless, which provided some geographic diversification from the heavy weighting of its European operations.  It remains to be seen what Vodafone will do with its "Project Spring."

            To diversify is a great investment strategy.

            It is not a good strategy for this site.  People look here for answers to their Quicken questions.  When discussions get sidetracked, there is much more chaff to sort through to find the nuggets of good Quicken information.  Please keep your points on track - how to enter this event into Quicken as a series of transactions, what values to use, how to find or support those values.  I realize there are some differences of opinion and circumstances; that is normal.  There is usually no one way solution.  The users must ultimately make their own choices.  

            Sidetracked or hijacked discussion tend to get closed.  Posts can be edited or deleted.  Let's not get to that stage.

            • you are absolutely right.  sorry for the digressions.  at the risk of being considered a total dummy, i will propose how i intend to handle the quicken transactions.  in advance i will note that although i consider it unwise to actually do the transactions, i am impatient and want to get this stuff off my desk.  some of the sequencing may not make sense, but i think i have accounted for things appropriately.  if not, enlightenment will be appreciated.
              first, i did the stock split - 6 shares for 11 shares.  i did this by hand using my old vod shares x .545454.  this gave my new vod share total.  then, i took my new vod share total and multiplied it by .48193 to get my total VZ shares.  you can do this differently, but you should end up with the same result.  i am doing this manually, NOT in quicken.  the problem then becomes how best to get those shares into quicken.  i decided not to do "add shares", because although i can establish my new basis that way, it will not provide tax information.  (the VZ stock is characterized as a dividend with a value established by vod as $48.115 per share.)  therefore, i intend to enter my number of VZ shares x $48.115 as a cash dividend and then buy VZ shares with it.  hopefully, will provide me with both the new basis for VZ and also give me the correct tax information.  

              as far as the sale of the fractional shares, all i really want to do is get close to what my broker says they are depositing in the account.  i sell whatever my fraction is (do not care what the broker has) in VZ at whatever it takes to get the proceeds identified in the account.  let's say your fraction is very different from your brokers.  all i care about is being able to reconcile with the broker's account and getting the vz shares to a nonfractionated number.  the selling price you end up with may make no sense, but if you end up with the correct $ amount the broker shows being added to your account and you show the correct # of VZ shares in your account and in quicken, i figure i am happy.  

              for the sale of the fractional share of vod, i am doing basically the same thing, except i have to calculate the per share basis using the pre split values.  that value should not have changed.  your tax basis in vod is the same after the split and the distribution.  when i do that manually and multiply that per share dollar value x the fraction left and make whatever adjustment i must to match what the broker says are the net proceeds, i come out quite close to what they show.  the numbers are off a few pennies to a few dollars, but i do not now have access to the actual decimal numbers used by the broker.  come tax time, i will use whatever numbers the broker provides (assuming they are close), and in the mean time, i will be able to reconcile my accounts.

              right now, when i look at the basis numbers my broker is using for VZ, they make no sense.  i am unsure what i will do about that.  in theory the numbers they show for "cost" would be in my favor if i sell the verizon shares.  come tax time, however, i doubt that inflated cost shown will be meaningful.

              again, i have hand-manipulated these numbers, not entered them in quicken, so at least part of the process may make no sense to you.  at least one time in the past i entered a transaction for a share spinoff from a company that had paid dividends over time, and quicken adjusted every transaction.  when i discovered an error, i had to backtrack every one of those transactions over multiple accounts.  if anyone can advise on how to avoid that process in the future, that would also be appreciated.         thanks in advance or not calling me an idiot.
            • robertflowers331 wrote:  "therefore, i intend to enter my number of VZ shares x $48.115 as a cash dividend and then buy VZ shares with it."
              IMO, you should also include the cash part of the special VOD dividend in this dividend - the $4.928005 per original VOD share, even though you buy the VZ shares with the only a part of the total dividend amount.  Alternatively, you later enter a second VOD dividend for this cash amount received.

              robertflowers331 wrote:  "if anyone can advise on how to avoid that process in the future, that would also be appreciated."
              That sounds like the consequence of Quicken's Corporate Spinoff action.  I recently wrote (again) about my thoughts on that type of transaction here:  https://qlc.intuit.com/questions/837802-how-do-i-enter-the-spinoff-of-dover-corp-to-knowles-corp-in-qw2013-rpm  The transactions we are talking about for VOD-VZ (Div, StkSplit, Buys and Sells) should not generate that type of situation.
            • Sorry if you received my reply of an hour ago. I was in a hurry and was using my IPhone.  If you did receive it I was wrong and you are right. The technique of recording the VZ distribution as a cash dividend in Quicken and then using that money to buy VZ will work.  It will track the fact that you have a dividend that you will need to report next year (2014 taxes) and will also give you basis in VZ if you use that cash dividend to buy the VZ shares. However I was right in that you worry too much about the fractional share from VOD. It is unimportant, i.e., immaterial.  If worse comes to worse you just report it with zero basis and therefore maybe you have an extra $35 in taxable income. No big deal. Your old pre merger basis will remain t e same and eventually when you sell VOD you get the benefit of the entire old basis..
            • agreed - thanks

            My VOD holdings still show partial shares from the reverse split. Anyone have any information as to when VOD will redeem them, or am I to sell them myself? 

            • I got a cash in lieu from vodaphone the same day
            • I also received cash. You should not have any partial shares. Not much money anyway.
            • I received cash in lieu of my fractional share of VOD on Feb. 25, the day after the split.  My brokerage is Fidelity.  I suggest you call your broker  and find out what's up!

            Relative to the Vodaphone (VOD) distribution of cash and Verizon (VZ) shares to VOD shareholders, I see now that Vodaphone has published their Form 8937 also published some other additional info in the last couple of weeks.  

            References:  

            Q&A for US ADR shareholders - http://www.vodafone.com/content/index/investors/verizon-wireless-transaction/information-for-us-adr-...

            Tax information in relation to the return of Value - http://www.vodafone.com/content/dam/group/investors/downloads/vzw/Tax_information_on_the_Return_of_V...

            Form 8937 - http://www.vodafone.com/content/dam/group/investors/downloads/vzw/VGPLc-form8937-Final03-21-2014.pdf

            Info for US and ADR shareholders - http://www.vodafone.com/content/dam/group/investors/downloads/vzw/Information_for_US_shareholders_an...

            Additional info (or if these links go dead) may be found at the Vodaphone Investor Relations site which has included sections devoted to this Verizon Wireless transaction - http://www.vodafone.com/content/index/investors/verizon-wireless-transaction.html

            My Caveat:  I am not a shareholder of Vodaphone or Verizon, nor am I a financial professional, CPA, tax attorney, financial adviser, Enrolled agent, IRS employee, nor do I hold any position qualifying me to comment or offer financial advice.  I am a faceless, unnamed internet user.  I have used Quicken for my own personal investment tracking purposes for over 23 years.  Take my opinions at their face value.  Do your own due diligence.  Consult with your respected advisers.  

            My spin:  The form 8937 does not add anything new to this discussion that I see.  It deals only with the reverse split (6-for-11) of the VOD shares.  It makes no mention of the VZ shares.  The form does indicate (lines 15 and 16) that the fractional shares of VOD resulting from the reverse split should be included in the determination of the tax basis of all VOD shares and that the cash-in-lieu amount received by the shareholder in place of those fractional shares should be treated as a sale of those shares.

            The 'Tax Information in relation to Return of Value' form indicates that the contained information is relevant to UK and Irish shareholders and may also be relevant to shareholders in other jurisdictions.  That document puts forth that the market value of the VZ shares when the scheme (the distribution plan) became effective was $48.115/VZ share.  There is also a line indicating the opening value of VZ on 2/24/14 on the NYSE of $47.02.  The alert reader will also note a factor of 10 difference in the cash entitlement and VZ share ratio as compared to what has been cited elsewhere.  That factor of 10 is because the ADRs that trade on US exchanges represent 10 shares of VOD as it trades on the London exchange.  Thus a US ADR shareholder with 100 VOD shares in actuality owns 1,000 of the VOD UK shares.  The information on this form is relative to the UK shares of VOD.  

            On the Q&A information for US shareholders, the information clearly states:  “The base cost in your Verizon shares received is the relevant market value of the Verizon shares at the point the Scheme became effective, this is $48.115.” 

            Based on the above ‘final’ information, my recommendations to the Quicken user attempting to present this in his/her Quicken data file would be as follows:

            1) Enter a Dividend transaction on 2/24/14 for VOD paying out $17.582298/VOD share.  That value is determined as:  $4.928005 (cash) plus 0.263001 shares of VZ valued at $48.115/VZ share.  For 140 shares of VOD, this would be a cash dividend of $2,461.52.

            2) Enter a Buy Shares transaction buying VZ shares at about $48.115/VZ shares.  The number of shares to buy would be your total number of VOD shares times 0.263001.  I would take that math out to three decimal places.  For 140 shares of VOD, you would buy 36.820 shares of VZ.  The amount paid for these shares would be the difference between the dividend determined in Step 1 (17.589228/VOD share) and the actual cash you received in early March (4.928005/VOD share).  This should leave in your account the $4.928005/VOD share you actually received.  You can be as precise as you choose.    For this transaction, let Quicken calculate the price/share.  The $48.115 is not critical at this point and Quicken may compute a slightly different value based on your precision choices.    

            3) Enter a Stock Split transaction for VOD receiving 6 new shares for each 11 old shares.  If you started with 140 VOD shares, after this split you will have 76.363636 shares of VOD.  

            4) Sell the fractional shares of VZ (0.820 for the 140 shares of VOD example) for the cash-in-lieu amount reported by your broker.  This should sell for about $47/share.  You will likely have a small capital loss on this sale since you bought at $48+ and are selling at $47+/VZ share.

            5) Sell the fractional share of VOD (0.363636 for the 140 share example) for the cash-in-lieu amount reported by your broker.  This will likely be in the $41/VOD share range.  You are likely to have a small capital loss on this transaction as well.

            I would likely choose to date the first three transactions 2/24/14 independent of what or when my brokerage reported.  I would possibly date the cash-in-lieu sales on the dates I received the cash-in-lieu. 

            Variations to this sequence are certainly possible, particularly for dates.  Some might prefer to record two dividends for the two parts (cash and value of VZ shares). 

            I have no interest in arguing about the relative value of VZ shares on this date or that date.  I have no interest in discussing the relative merits of this transaction from an investment perspective.  This forum is about presenting the transaction event in Quicken – nothing else.  I have put forth all the original source material I have considered.  If any user chooses to use different values (or different approaches) they are certainly free to do so.  Off topic tangents are likely to get this discussion closed.  

            If you want to present a follow-up question to me about my recommendations, please make it clear you are addressing your question to q.lurker.  Please be as specific as possible with your followup questions.  

            • q.lurker - i did not rerun your math, but i think that my prior post results in the same calculations as yours.  i will note for simplicity purposes that the cash dividend received from VOD was just that, a cash dividend.  as you note, the VZ shares received will be a "dividend" calculated at the number of shares of VZ received times $48.115.  that also becomes the tax basis for your shares of VZ.  as an aside, my broker does not identify precisely how the VZ shares appeared in my non-tax sheltered account and does not have what i think is the correct tax basis for the VZ shares.  although that is not relevant to how the calculations are entered in quicken, it could become relevant if and when the VZ shares are sold.
            • As long as you have in Quicken the correct acquisition date (either 2/21/14 or 2/24/14, I can see justification for both dates) and the correct basis (within fractions of a penny of $48.115/VZ share) for the VZ shares, you can get the shares into Quicken through an Add Shares or a Buy transaction and then later sales will be fine.  

              In my experience, the brokerages have not always gotten the basis right on these types of transactions.  My brokerages have always corrected my info when justified and upon my request.  I haven't had such a circumstance arise since brokerages became responsible for reporting basis information on sales.  I realize that may not be true for all users.
            • Responding to q.lurker:

              Thanks for sharing your research and recommendations.  Your method is logical and certainly works from an accounting perspective and for tax tracking purposes.  I entered mine the same way except I recorded 2 separate dividends to keep the VZ shares portion separate as I wait and see how my broker is going to report this "income".

              The only problem I have is with the stock split transaction itself.  Since this isn't a traditional stock split, but rather the company selling off a portion of its holdings and then consolidating shares to keep the share price relatively constant - it is almost like a spin-off.  Recording it as a stock split results in Quicken adjusting the before split share price assuming you choose to have quicken adjust prices for stock splits.

              I am using Q Premier 2012 and you can't choose to have Q show adjusted share prices for splits for one security but not another.  So I need to uncheck the "Split Adjust" box if I want to view the VOD price history and then recheck to box for other securities.  This is only a minor annoyance, but I am wondering if I should just instead enter a "shares removed" transaction instead of a stock split.

              I agree I need to keep the dividends and VZ purchase transactions the way they are since this most accurately records the transactions the way they will be taxed, but the only reason I see for entering a stock split transaction is to have Quicken adjust historical share prices for trend analysis purposes.  I think I am going to change it to a shares removed transaction and enter notes about the reverse split and wanted your opinion on that thought process.
            • after posting the above, I realized that a removed shares transaction doesn't work because that would lower my aggregate cost basis.  So I guess it really is as if the company has lost value.  I need Q to keep that original cost basis to show a loss when I sell the stock that will roughly offset the dividends I received for this odd transaction.
            • rscotty69:  Let's start with the real world.  Up to Feb 21, VOD (the US ADRs) was trading in the upper 30s and closed on Friday, Feb 21, at 39.00.  It opened on Monday Feb 24 after the dividend and reverse split at 41.50, closed at 41.20 and continued trading the next few days in the low 40s.  If you choose to edit your price history (Security Detail View -- Update pulldown), those are the prices you should be seeing across that weekend.

              I will bet that you are seeing prices in the 25 range before the split.  I think this is (another) case of Intuit's data supplier providing split-adjusted prices when Quicken wants (needs) the unadjusted prices.  If you can confirm the prices you see (unadjusted by Quicken) I will try to bring it to the attention of the right people.  

              If you are seeing the wrong values, you can get the right historical data from Yahoo Finance.  Look at their Historical Price information.  There you can download prices to a csv file.  Csv files can be imported into Quicken.  Off the top, I do not recall if some editing is required or not.  If you want assistance with that aspect, I suggest you start a new question.  (There are also other questions already out there discussing that process.)
            • My prices are accurate (37, 38, 39 the three days before the split) and then 41 after.  When you check the box to adjust for split, the prices displayed/charted are almost double before the split (as they should be - actually 11/6 the actual price to match the reverse split).  Conceptually, it seems wrong because for a normal split when the value of the security does not really change, their is a price drop (or increase in the case of a reverse split) and so letting quicken adjust the price displayed for the split, the prices before the split would be shown as 1/2 what they actually were (for a true 2:1 split) and so graphically it eliminates the drop (or jump) in price and smooths the graph.  But in the case of this VOD reverse split, the share price in the real world did not jump ~11/6 of the before split price because the company divested itself of its VZ holdings and returned them along with cash to the shareholder.  So the value of VOD has truly changed.

              So even though it looks abnormal for the Quicken adjusted share prices to be almost double (11/6) prior to the split, this is a true representation of what has occurred because the value of your remaining shares of VOD following the split are almost 1/2 of what they were before the split.  And the shareholder was compensated for the drop in value in the way of cash and VZ shares.

              I no longer think there is anything wrong with entering it the way you suggested and think Q is handling it correctly, it just seems abnormal because this is an abnormal transaction.  Thanks again for your thoughts.

              I will mention that if you download historical prices, quicken will import erroneous prices (about 1/2 the actual price) for certain periods (late 2012 and mid 2013) so there are jumps and drops in the historical prices.  I assume this is because the database has periods where the price is actually for the UK shares (double shares - 1/2 price) and then it returns to the US ADRs (which is somewhat annoying).  I just went through my historical prices and deleted those periods.
            • Also, thanks for tip on downloading CSV file from Yahoo for historical - I will do that.
            • hi rscotty - it seems like a long time since I fooled with the numbers, but the key (I think) is the addition Vodafone (web site) added to its Q&A - the last item, which valued the Verizon shares at $48.115.  so, if you got 100 Verizon shares, you got a dividend of $4811.50.  I took it as a vod cash dividend and then did a vz buy.  that transaction was supported by my broker.  the reverse split in Vodafone might well show you with a large loss in Vodafone.  mine did, and that is also correct.  I did the two small sales just to match what the broker had, regardless of the selling price, just to get rid of the partial shares.  do not try to match the selling price to the $48.115 figure for Verizon.  most likely it will not work, because vz was not selling for what vod said was its value.  as you are aware, if you did not have vod in a tax sheltered account, you now have significant tax exposure from the dividend.  as an aside, as one individual noted, things might yet change again.

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