Apple stock split

stphnstevey

For Capital gains purposes I track the price I bought Apple shares, the amount and then work out the gain via the sale price
At the moment, my spreadsheet shows a considerable loss as the number of new shares is not accounted for
How would I account for a stock split in this way? Would I simply need to alter the number sold by the amount of the split, keeping the number of shares purchased and price the same?

Thrugelmir

You need to increase your share holding in August to account for the 4:1 share split.  The cost price per share likewise gets adjusted. 

Do you work on a pooled basis? Rather than FIFO. 

bowlhead99

stphnstevey said:

the number of new shares is not accounted for
How would I account for a stock split in this way? Would I simply need to alter the number sold by the amount of the split, keeping the number of shares purchased and price the same?

You wouldn't "alter the number sold", because the number of 'new shares' you own and are now choosing to sell is a known quantity and there is nothing wrong with the quantity your contract note now says that you are selling, if you do a deal today.

Your issue is surely that you haven't bothered to update the price you paid for these 'new shares', and your spreadsheet is assuming you paid some high amount for each (small, post-split) share. But actually, the price in your spreadsheet is for a large, pre-split share which is not what you currently have, because the pre-split share was divided into four post-split shares.  So your spreadsheet is not showing the correct quantity of shares you have now, and by logical extension it is not correctly showing the cost of each of those shares, because you never bothered to tell your spreadsheet that X amount of old shares turned into a greater amount Y of new shares.

So, you can fix your spreadsheet by updating it so it correctly shows the number of shares you hold and ensuring that the the price it says you paid for a new, post-split share is whatever you did pay for each of these new, post split shares when you bought them as part of buying what were then, bigger, pre-split shares.

You can figure out what you paid for each of your post-split shares by seeing what you paid for a bigger, pre-split share, and spreading the cost over all the post-split shares that your pre-split shares turned into.  It is mathematically pretty simple as you have tracked what the pool of shares cost, and on split-day the total shares cost the same, but there are more of them, so they cost less each. 

Another way of saying it, is that you can't have any problem when selling your 'new shares', because surely you can work out how much you paid to buy any of the 'new shares' that you now own and might sell.  The idea that you should force your spreadsheet to keep the information about the old shares (that you don't own any more) and every time you sell the new shares you really own, pretend that you are selling old shares instead, is just going to get confusing, especially if you now sell an odd number of shares which would represent some fraction of an 'old share' that you are tracking because of your spreadsheet being stuck in the past.

Simply, work out how many 'new shares' you now own from the effective date of the split, and what the CGT-allowable cost of those shares is, each, and put that in your spreadsheet to use in any calculations relating to disposals of new shares.

stphnstevey

bowlhead99 said:

stphnstevey said:

the number of new shares is not accounted for
How would I account for a stock split in this way? Would I simply need to alter the number sold by the amount of the split, keeping the number of shares purchased and price the same?

You wouldn't "alter the number sold", because the number of 'new shares' you own and are now choosing to sell is a known quantity and there is nothing wrong with the quantity your contract note now says that you are selling, if you do a deal today.

Your issue is surely that you haven't bothered to update the price you paid for these 'new shares', and your spreadsheet is assuming you paid some high amount for each (small, post-split) share. But actually, the price in your spreadsheet is for a large, pre-split share which is not what you currently have, because the pre-split share was divided into four post-split shares.  So your spreadsheet is not showing the correct quantity of shares you have now, and by logical extension it is not correctly showing the cost of each of those shares, because you never bothered to tell your spreadsheet that X amount of old shares turned into a greater amount Y of new shares.

So, you can fix your spreadsheet by updating it so it correctly shows the number of shares you hold and ensuring that the the price it says you paid for a new, post-split share is whatever you did pay for each of these new, post split shares when you bought them as part of buying what were then, bigger, pre-split shares.

You can figure out what you paid for each of your post-split shares by seeing what you paid for a bigger, pre-split share, and spreading the cost over all the post-split shares that your pre-split shares turned into.  It is mathematically pretty simple as you have tracked what the pool of shares cost, and on split-day the total shares cost the same, but there are more of them, so they cost less each. 

Another way of saying it, is that you can't have any problem when selling your 'new shares', because surely you can work out how much you paid to buy any of the 'new shares' that you now own and might sell.  The idea that you should force your spreadsheet to keep the information about the old shares (that you don't own any more) and every time you sell the new shares you really own, pretend that you are selling old shares instead, is just going to get confusing, especially if you now sell an odd number of shares which would represent some fraction of an 'old share' that you are tracking because of your spreadsheet being stuck in the past.

Simply, work out how many 'new shares' you now own from the effective date of the split, and what the CGT-allowable cost of those shares is, each, and put that in your spreadsheet to use in any calculations relating to disposals of new shares.

Ok, I may not be running my spreadsheet very well, but I move any sold shares to another sheet from those I count in my portfolio. In that way I can calculate by tax year those sold and CGT

Where do I put the entry for the original purchase of Apple shares? If I move it to the sold shares page, it is not a sale. If I don't move it, then it is counted in my portfolio but inaccurately as the new shares should take its place?
Hope that makes sense
It maybe that I haven't designed my spreadsheet very well, but for want of another simple tracker, I have made do as best my excel skills can  

stphnstevey

Thrugelmir said:

You need to increase your share holding in August to account for the 4:1 share split.  The cost price per share likewise gets adjusted. 

Do you work on a pooled basis? Rather than FIFO. 

I should pool them.............but I haven't worked out a formula to do so...........I generally have so far sold all of my holding in that share is selling, so haven't really needed to

bowlhead99

The bottom line is that if you get hit by a bus tomorrow, anyone dealing with your estate would probably like to know what assets you actually have now and (potentially depending on tax rules) what they had cost and when bought. So keeping the incorrect quantity of shares and the old price of the shares you no longer own, is not helpful.

Why not simply put an entry on your 'sold' sheet that shows that you 'sold' the (e.g.) 100 'old shares' that you held on split day for the exact price that you'd paid for them (no gain no loss) but what you received was not cash, it was  400 'new shares', and those new shares collectively inherit the cost of whatever the old shares had collectively cost.

Just book it as a sale and re purchase for the same dummy amount of money if it helps, although you know it is not really a sale and purchase just an internal transformation of one set of shares for another in a share-for-share exchange.

Alternatively just edit the original shares to describe them as the new shares and record that you bought four times as many of them for 1/4 the price each, deemed to have been purchased on the original purchase dates.

What matters is you should have a record of the new shares you own and your record should say what they are deemed to have cost (i.e. based on what you had originally paid for the larger, pre-split shares) and when you were deemed to have bought them (i.e. whenever you had bought the original shares).  The date of purchase is not really so important at the moment as in the UK the tax rates are the same regardless of purchase date as we don't currently have any 'indexation allowance' or difference between short term and long term capital gains tax rates, but you never know what might be introduced in future.

Thrugelmir

stphnstevey said:

Thrugelmir said:

You need to increase your share holding in August to account for the 4:1 share split.  The cost price per share likewise gets adjusted. 

Do you work on a pooled basis? Rather than FIFO. 

I should pool them.............but I haven't worked out a formula to do so...........I generally have so far sold all of my holding in that share is selling, so haven't really needed to

Pooling requires no formulas other to total the trades and calculate the average purchase price per share.  Adjusting for share splits or other events that occur, ie. rights issues. 

Tolteca87

Add an Observation column to the spreadsheet and add a note in it saying Stock split 4 from 1.