how to handle - CSC and HPE merger/spinoff to form DXC
Wondering how others are handling this transaction, from the point of view of holding HPE stock, which still exists. Guess it would look like a spinoff, with HPE stockholders receiving 0.086 shares of DXC for every share of HPE stock, while still retaining their full HPE shares, just lesser valued. Also, related, is the Cost Basis for the newly created DXC stock.
Comments
-
Everything I am seeing keeps referring to this as a tax-free event. If so, then your total basis does not change and typically, your original (HPE) basis gets split between HPE and DXC in proportion to their relative fair market values. That is what the basic spinoff action does.
So in principle, HPE was valued at about $18/sh and DXC at about $69/sh. But you only had 0.086 shares of DXC for every HPE share. That total FMV after spinoff become $18 + 0.086 * $69 = $23.93. $18 / $23.93 = 75.2% of the basis stays with HPE; 23.8% of the original HPE basis transfers to DXC. But note!!!!! You brokerage or HPE and DXC may choose different FMV than I have cited and may thus get somewhat different percents than I have shown. I am presenting an example, not definitive data!!! The company will issue a Form 8937 sometime that presents their opinion.
Once those percentages are properly determined, I would be using Remove Shares and Add Shares transactions to drop the HPE basis downward and create the DXC holding with its correct basis.
For the CSC shareholder, this would either be a name change or a Corporate Acquisition where DXC acquires CSC.0 -
Why would you use Remove Shares to drop the HPE basis downward when the number of HPE shares remains the same?
Greg
Quicken Subscription HBRP - Windows 100 -
I do not trust the RtrnCap transaction to get the cost basis changed correctly for multiple lot holdings. Thus my preference in this type of case has become to do one Remove shares (all HPE shares) followed by pairs of Add Shares (one HPE and one DXC, in this case) for each original lot of HPE held. This is removing the shares at their original basis and adding them back in at their reduced basis. Each Add Share would reflect the original lot acquisition date, the proper proportion of the original basis, and the correct number of shares for that lot. Thus one might end up with:Greg the Geek said:Why would you use Remove Shares to drop the HPE basis downward when the number of HPE shares remains the same?
Greg
Remove Shares 100 HPE (original basis = $100 for lot 1 and 53.32 for lot 2)
Add Shares 80 HPE; Basis = 75.20; Acq Date = 1/2/13
Add Shares 6.88 DXC; Basis = 24.80, Acq date = 1/2/13
Add Shares 20 HPE; Basis = 40.10; Acq Date = 2/3/14
Add Shares 1.72 DXC; Basis = 13.22; Acq date = 2/3/14
HTH0 -
I also tend to handle things manually, as I have learned over the years that Quicken really messes things up with Splits, Spinoffs, etc - I like to keep my "original" relative Cost Basis, and not have it reflect some weird numbers from the point of the split/spinoff.... so - I adjust things after all the official numbers are out.Greg the Geek said:Why would you use Remove Shares to drop the HPE basis downward when the number of HPE shares remains the same?
Greg
0 -
Related to this, I have unexercised CSC Stock Options recorded in my Fidelity account, some vested and some unvested. The merger into DXC resulted in a one-for-one non-taxable exchange. Do I go back to original grant and just change the security name in Quicken? Or is there a way to go back and edit the original grant?Greg the Geek said:Why would you use Remove Shares to drop the HPE basis downward when the number of HPE shares remains the same?
Greg
0 -
This may be a dumb question, but what date should be used for the "transaction date" on the "Remove Shares" entry? I assume that I should use the same date as the original purchase date because (also assuming since I haven't made the entry yet) if I use the date of the spin-off, Quicken will incorrectly reflect the holding of shares of HPE for past periods. Or is that inevitable anyway? Suggestions on the correct transaction date to use? Am I over-thinking this?
Quicken Home, Business & Rental Property - Windows 10-Home Version
- - - - Quicken User since 1984 - - -
- If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you. -0 -
Wrong assumption. You should use the date the spinoff occurred for the transaction dates of both the Remove Shares and the Add Shares transactions. You held those HPE shares in the past (since their original acquisition). You (I) don't want to be changing history. That transaction date would be March 31, 2017 as I see it.Frankx said:This may be a dumb question, but what date should be used for the "transaction date" on the "Remove Shares" entry? I assume that I should use the same date as the original purchase date because (also assuming since I haven't made the entry yet) if I use the date of the spin-off, Quicken will incorrectly reflect the holding of shares of HPE for past periods. Or is that inevitable anyway? Suggestions on the correct transaction date to use? Am I over-thinking this?
0 -
The Form 8937 info is currently available here: http://investors.hpe.com/~/media/Files/H/HP-Enterprise-IR/documents/stock-cost-basis-allocation-form...q.lurker said:Everything I am seeing keeps referring to this as a tax-free event. If so, then your total basis does not change and typically, your original (HPE) basis gets split between HPE and DXC in proportion to their relative fair market values. That is what the basic spinoff action does.
So in principle, HPE was valued at about $18/sh and DXC at about $69/sh. But you only had 0.086 shares of DXC for every HPE share. That total FMV after spinoff become $18 + 0.086 * $69 = $23.93. $18 / $23.93 = 75.2% of the basis stays with HPE; 23.8% of the original HPE basis transfers to DXC. But note!!!!! You brokerage or HPE and DXC may choose different FMV than I have cited and may thus get somewhat different percents than I have shown. I am presenting an example, not definitive data!!! The company will issue a Form 8937 sometime that presents their opinion.
Once those percentages are properly determined, I would be using Remove Shares and Add Shares transactions to drop the HPE basis downward and create the DXC holding with its correct basis.
For the CSC shareholder, this would either be a name change or a Corporate Acquisition where DXC acquires CSC.
Their breakdown achieves percentages of 75.1% for the HPE portion and 24.9% to the Everett DXC portion (vs my 75.2% and what should have been 24.8% above).0 -
I used the Corporate spinoff function on Quicken Premier 2017 ver.6 to convert my HPE shares into new HPE and DXC. Took forever as have 1st lot in 1998 and reinvested dividends every year thereafter. I've done this function before with no problems including the split of HPE and HP Inc. But not this time. The end result was that every old lot shows the same date of 3 April 2017 (1st day of trading) in the "transaction" area for both stocks. Yet the "Holdings" list shows the various lots original older dates for each lot of each new stock. In the past including the HPE and HP Inc. split, the entries in the "transaction" were entered back in time at each purchase date...ie. 1st lot in 1998, 2nd lot 1999, etc. I now have some 80+ entries on 3 April 2017. Is this some change in how Quicken shows the entries? I have also done the entries by hand in Excel. The Quicken "Holdings" section is close enough to my manual entries. But I'm afraid these 3 April 2017 entries has screwed up my Quicken. Is this a change in the 2017 Quicken?Frankx said:This may be a dumb question, but what date should be used for the "transaction date" on the "Remove Shares" entry? I assume that I should use the same date as the original purchase date because (also assuming since I haven't made the entry yet) if I use the date of the spin-off, Quicken will incorrectly reflect the holding of shares of HPE for past periods. Or is that inevitable anyway? Suggestions on the correct transaction date to use? Am I over-thinking this?
0 -
I used the Corporate spinoff function on Quicken Premier 2017 ver.6 to convert my HPE shares into new HPE and DXC. Took forever as have 1st lot in 1998 and reinvested dividends every year thereafter. I've done this function before with no problems including the split of HPE and HP Inc. But not this time. The end result was that every old lot shows the same date of 3 April 2017 (1st day of trading) in the "transaction" area for both stocks. Yet the "Holdings" list shows the various lots original older dates for each lot of each new stock. In the past including the HPE and HP Inc. split, the "transaction" entries were automatically entered back in time at each purchase date...ie. 1st lot in 1998, 2nd lot 1999, etc. I now have some 80+ entries on 3 April 2017. Is this some change in how Quicken shows the entries? I have also done the entries by hand in Excel. The Quicken "Holdings" section is close enough to my manual entries. But I'm afraid these 3 April 2017 entries has screwed up my Quicken. Is this a change in the 2017 Quicken?0
-
@Gail. What you are describing may be a difference between what Quicken considers a taxable spinoff, vs the more traditional non-taxable spinoff. Non-taxable back dates transactions. Taxable uses current date. That is basically a toggle check when using the spinoff macro-transaction. (I am not sure what you meant by "shows the same date ... In the transaction area".).Gail Bernkopf said:I used the Corporate spinoff function on Quicken Premier 2017 ver.6 to convert my HPE shares into new HPE and DXC. Took forever as have 1st lot in 1998 and reinvested dividends every year thereafter. I've done this function before with no problems including the split of HPE and HP Inc. But not this time. The end result was that every old lot shows the same date of 3 April 2017 (1st day of trading) in the "transaction" area for both stocks. Yet the "Holdings" list shows the various lots original older dates for each lot of each new stock. In the past including the HPE and HP Inc. split, the "transaction" entries were automatically entered back in time at each purchase date...ie. 1st lot in 1998, 2nd lot 1999, etc. I now have some 80+ entries on 3 April 2017. Is this some change in how Quicken shows the entries? I have also done the entries by hand in Excel. The Quicken "Holdings" section is close enough to my manual entries. But I'm afraid these 3 April 2017 entries has screwed up my Quicken. Is this a change in the 2017 Quicken?
0 -
Thanks q.lurker for quick reply. I did use the "Corporate Securities Spin-Off" function. I did not use the option on the same screen called "How do I record a taxable corporate spin-off?" I used this same function back in 2015 when HP Inc. spun-off Hewlett Packard Enterprise in a non-taxable transaction. And Quicken correctly entered each lots spin-off (the adjusted HP and adjusted HPE) backdated to the purchase date of each lot. I assumed this would happen again, but instead Quicken entered 3 entries dated April 3, 2017 for the first lot 10-5-1998: "Removed HPE 99.5769 sh. as Non taxable spinoff"; then "Added HPE 74.5493 sh. as Non taxable spinoff"; then "Added DXC 6.402592 sh. as Non taxable spinoff". Note that there is no reference to a date of the original lot. Quicken repeated 3 transactions for each lot in the past yet giving the same date of the tranactions as April 3, 2017. There are no spin-off entries on the original date of the multiple lots. The only place which seems to reflect the spinoffs with the correct historic lot dates is in the "Holdings" area of Quicken. I now have 3 entries for each old lot times 63 lots = 189 entries on April 3, 2017. Each lot should have 3 entries on the historic buy date. I hope I am being clear. Why the change from the 2015 entries?0
-
Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.0
-
Did you check the acquisition dates for any of the 189 entries? The acquisition date is likely to be different than the transaction date.Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
Quicken user since Q1999. Currently using QW2017.
Questions? Check out the Quicken Windows FAQ list0 -
Temporary comment as I intend to look further into this:Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
Indeed the form did change to eliminate the "Taxable" checkbox.
Someone replaced that option with a set of instructions that appear to me to be totally inaccurate. Where do these folks get these ideas from?
I can't say if the change also leads to the experience Gail is citing, but it would not surprise me at this point. That is what I intend to examine further.0 -
Upon further review:Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
They have changed the Corporate Spinoff acction -- for the better . That means, the action now appears to produce the transactions I would use.
Background: For years, like forever, Quicken has generated backdated RtrnCap and Buy transactions for Corporate Spinoff situations. These backdated transaction changed history and subsequently misrepresented net worth over time, investment performance, and a slew of similar historical information. I, and others, have long advocated that entering currently dated Remove and Add Shares transactions was a preferable way to go.
So what you should now be seeing, Gail, is one Remove Shares taking out the shares of the original holding, followed by two Add Shares for each lot of that original holding. Each of those Add Shares should reflect the Acquisition Date of the original lot and the Transaction date of the spinoff. If you look at a Holding or Portfolio view for the day before and the day of the spinoff, the key change should be the addition of the new shares of the new company, and the split of the original company's cost basis to the two companies after the spinoff. With respect to those two companies, the total cost basis should not have changed. If that appears to be true, I think you are in great shape with these 189 transactions.
From my test file:
As you can see, there is one Remove taking away 20 shares, then pairs of Add Shares adding 2, 4, 6, and 8 shares at a time foe my four lots. For the highlighted (first) Add Shares transaction, you can see that the transaction date is 7/2/17, but there is another date listed as 1/1/14. That is the acquisition date of that lot. All the necessary data appears to be in the right places.
HTH0 -
Lurker, you're running QW2017?Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
Quicken user since Q1999. Currently using QW2017.
Questions? Check out the Quicken Windows FAQ list0 -
I am. For two months now.Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
0 -
q.lurker, Thanks so very much. I'm sorry to say I manually entered every entry using the old method of previous versions, using each original purchase date. The good news is that I did save my Quicken file before doing this, so after reading your update I abandoned the manual entry version and returned to the new QW2017 method. I tend to agree with you that the new method is probably better. My only complaint is that if I had seen the original purchase date in the new versions "Added" entries I might have realized that Quicken changed their method. Unless you highlight or open the "Added" entry you don't realize that the date is there. I am glad to be done with it. Wasting way too much time. That being said: thank you, thank you, thank you. : )0
-
q.lurker, do you understand how to adjust the "cost per old share" and "cost per new share" for "new shares issued" not equal to "1?"Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
The reason for my question, for this DXC spin off, when I use:
New shares issued: .086
Cost per old share: 75.1
Cost per new share: 24.9
I obtain the incorrect cost basis for both HPE and DXC, skewed to HPE.
However, if I use:
New shares issued: 1
Cost per old share: 75.1
Cost per new share: 24.9
I obtain the correct cost basis, but the quantity of shares is obviously incorrect.
i would not expect to need to adjust the cost per shares values based on a "new shares issued" not equal to "1."
Thank you.0 -
@George Thomas: My quick look back at this suggests that the share ratio should be 0.086 and the two prices should be HPE @ 17.79 and DXC @ 64.68. Those values should yield the 75.1 / 24.9% allocation of cost basis.Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
Generally it would be helpful to know your Quicken version, but I think that answer applies for both 2017 and prior versions.0 -
q.lurker. Thank you. I was applying the percent allocation rather than the share price.Gail Bernkopf said:Just an update. I visited Quicken Support article "How Do I Record a Corporate Spin-off of New Securities?" Article ID: HOW23724, Updated 2/9/2017. It shows that there is a "Taxable spin-off" box to be checked off if taxable. There is no box available on my version of Quicken 2017. And as my entries were NOT taxable I would not have checked the box anyway. Also the article states that "If this is a non taxable spin-off, Quicken enters a pair of transactions for each open lot of the parent company - a Return of Capital transaction from the parent company and a Buy transaction for the spin-off company, recorded with the same date as the open lot." AND "If this is a taxable spin-off, Quicken enters one Return of Capital transaction from the parent company and one Buy transaction for the spin-off company, recorded on the day of the spin-off." I must conclude that there is a glitch in my Quicken as it recorded all 189 entries on the day of spin-off instead of the date of the original purchase dates. I will contact Quicken support. Thanks again.
I'm using quicken 2017.0
