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ASIX spin off post in Quicken 2016

Roger McCartney
Roger McCartney Member ✭✭
edited July 2018 in Investing (Windows)
Quicken 2016 Home & Business--  Windows
Question:
HON  made a spin off dividend  of 1 share of ASIX for every 25 shares of HON.  They paid cash in Lieu of Fractional shares. The following is from my brokerage statement:
Example:
  • 230 --shares of HON I owned
  • 9.0 ---shares of ASIX were spun off
  • $2.84 --in cash in Lieu of fractional shares.
  • 10/6/2016---Settlement date
  • 9/16 COM RD  ( I don't know what this means)
I looked up the price of the shares on Morningstar:
HON:
  • 10/6 $115.61
  • 10/7  $106.94
ASIX:
  • 10/6 $14.01
  • 10/7 $15.10
Thanks for your help!  Roger

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    I have not seen a clear statement from Honeywell on this transaction.  Their press release refers to it as a special dividend and it appear that way in the Investor Relations dividend history.  The reported value of that dividend was $0.6636 per HON share which would correspond to a ASIX share price of $16.59.  Whether that type of value gets reported in that fashion on year end 1099 Div forms remains an open question.  I that scenario for Quicken, I would be recording a cash dividend of 0.6636/HON share followed by a purchase of 9.2 shares of ASIX at $16.59/share then a sale of the 0.2 ASIX shares for the 2.84 you received as cash in lieu ($14.20/share).  Effectively, that picture makes the ASIX distribution a taxable event for you at dividend rates.

    Costbasis.com (a source I have frequently used and consider to be a quality source) reports the transaction as a non-taxable spinoff with 0.562% of the original HON basis being transferred to the new ASIX holding.  Their figures are based on the closing prices oh HON and ASIX on 10/3/16 - the first trading date after the separation.  Your quoted prices on 10/6 and 10/7 are not relevant.  In that scenario for Quicken, I would be choosing to do a Remove Shares transaction for your 230 shares of HON, followed by (assuming one lot of HON), an Add Shares for 230 shares of HON with the original acquisition date and 99.438% of the original basis, and Add Shares for 9.2 shares of ASIX with the original acquisition date and 0.562% of the original HON basis, then a Sell Shares selling 0.2 shares of ASIX for the $2.84 cash in lieu received.  That type of event will not develop an taxable income at this time other than some small cap gains on the sale of the 0.2 shares of ASIX.  

    I can't state which method is more correct, and you may want to wait until HON publishes more information.  

    HTH
  • Roger McCartney
    Roger McCartney Member ✭✭
    edited November 2016
    q.lurker said:

    I have not seen a clear statement from Honeywell on this transaction.  Their press release refers to it as a special dividend and it appear that way in the Investor Relations dividend history.  The reported value of that dividend was $0.6636 per HON share which would correspond to a ASIX share price of $16.59.  Whether that type of value gets reported in that fashion on year end 1099 Div forms remains an open question.  I that scenario for Quicken, I would be recording a cash dividend of 0.6636/HON share followed by a purchase of 9.2 shares of ASIX at $16.59/share then a sale of the 0.2 ASIX shares for the 2.84 you received as cash in lieu ($14.20/share).  Effectively, that picture makes the ASIX distribution a taxable event for you at dividend rates.

    Costbasis.com (a source I have frequently used and consider to be a quality source) reports the transaction as a non-taxable spinoff with 0.562% of the original HON basis being transferred to the new ASIX holding.  Their figures are based on the closing prices oh HON and ASIX on 10/3/16 - the first trading date after the separation.  Your quoted prices on 10/6 and 10/7 are not relevant.  In that scenario for Quicken, I would be choosing to do a Remove Shares transaction for your 230 shares of HON, followed by (assuming one lot of HON), an Add Shares for 230 shares of HON with the original acquisition date and 99.438% of the original basis, and Add Shares for 9.2 shares of ASIX with the original acquisition date and 0.562% of the original HON basis, then a Sell Shares selling 0.2 shares of ASIX for the $2.84 cash in lieu received.  That type of event will not develop an taxable income at this time other than some small cap gains on the sale of the 0.2 shares of ASIX.  

    I can't state which method is more correct, and you may want to wait until HON publishes more information.  

    HTH

    Wow!  Quick response and so concise!   Thanks for the easy to follow answer!  Roger
  • Roger McCartney
    Roger McCartney Member ✭✭
    edited November 2016
    Thanks for the easy to follow solution!  
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited December 2016
    q.lurker said:

    I have not seen a clear statement from Honeywell on this transaction.  Their press release refers to it as a special dividend and it appear that way in the Investor Relations dividend history.  The reported value of that dividend was $0.6636 per HON share which would correspond to a ASIX share price of $16.59.  Whether that type of value gets reported in that fashion on year end 1099 Div forms remains an open question.  I that scenario for Quicken, I would be recording a cash dividend of 0.6636/HON share followed by a purchase of 9.2 shares of ASIX at $16.59/share then a sale of the 0.2 ASIX shares for the 2.84 you received as cash in lieu ($14.20/share).  Effectively, that picture makes the ASIX distribution a taxable event for you at dividend rates.

    Costbasis.com (a source I have frequently used and consider to be a quality source) reports the transaction as a non-taxable spinoff with 0.562% of the original HON basis being transferred to the new ASIX holding.  Their figures are based on the closing prices oh HON and ASIX on 10/3/16 - the first trading date after the separation.  Your quoted prices on 10/6 and 10/7 are not relevant.  In that scenario for Quicken, I would be choosing to do a Remove Shares transaction for your 230 shares of HON, followed by (assuming one lot of HON), an Add Shares for 230 shares of HON with the original acquisition date and 99.438% of the original basis, and Add Shares for 9.2 shares of ASIX with the original acquisition date and 0.562% of the original HON basis, then a Sell Shares selling 0.2 shares of ASIX for the $2.84 cash in lieu received.  That type of event will not develop an taxable income at this time other than some small cap gains on the sale of the 0.2 shares of ASIX.  

    I can't state which method is more correct, and you may want to wait until HON publishes more information.  

    HTH

    Honeywell has now published their Form 8937 for this transaction (see the bottom of this page currently).  The information is substantially the same as costbasis.com used.  The 8937 form ends up with 0.5294% of the basis going to Advansix; costbasis.com was at 0.562%.  It is my understanding that the allocation is fundamentally the investor/taxpayer's choice and responsibility.  

    At this point, I'll stick with my basic recommendations outlined above, however, you choose to determine the basis allocation percentages.    
This discussion has been closed.