how to record corporate spinnoff taxable

Unknown

I am trying to record a spin off following Article ID: HOW23724 running Q17 on windows 10.

the article says If this is a taxable spin-off, select the check box.

There is no check box. there is another line that isn't reference in How23724.that has details on recording taxable. Since this is mentioned how do I do it?

mshiggins

Please let us know the companies involved and we can provide detailed instructions with specific values pertinent to the transaction.

q_lurker

That article is now out-of-date with respect to QW2017.  The pop-up form changed - perhaps in R5 or R6.  The resultant transactions for the non-taxable spinoff now come out in a more accurate manner.  

I believe the most applicable transactions for a taxable spinoff are to sell the old shares (taxable due to cap gains incurred) and then buy the new shares (new holding, new basis, new acquisition date).  Specific cases may be different.

As mshiggins asks, if you share the companies and details, we may be able to offer more specific suggestions.

Unknown

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

q_lurker

Bill Kline said:

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

Based on the IRS Form 8937 that was filed (see http://investor.metlife.com/phoenix.zhtml?c=121171&p=irol-BHFDI) that transaction is considered a non-taxable event.  It is only the sale of the fractional share for the cash-in-lieu amount received that generates any current capital gain tax liability.  

I believe you can fairly use the Corporate Securities Spinoff in QW2017 R6 and later to generate that transactions in Quicken.  (Prior versions of Quicken should use a different approach, IMO.)  Your new shares ratio will be 0.090909 for the 1-to-11 ratio.  Prices can be the values shown in the cited form 8937 (MetLife = 48.53 and BHF = 61.72) or other values you might deem to be more appropriate.  The 17 shares should yield 1.545454 shares of BHF.  You would (in Quicken) then sell 0.545454 shares of BHF for the $32.02 cash-in-lieu received  

To the extent that the $32.02 exceed the basis for those shares, you will have potential capital gains tax on the gain come next April 15.  If you gain was as high as $10, that might become $1.50 in added tax burden.  That is, not likely to be a big deal.   

Tom Young

Bill Kline said:

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

Actually, you don't have a "taxable spinoff", you have a tax-free spinoff of the Brighhouse Financial stock followed by a taxable sale of a fractional share of the stock received.

You allocate 10.36% of your basis in MetLife to ALL the Brighthouse Financial stock you received, including the fractional share.  The remaining 89.64% of the original basis of your MetLife shares stays with the 17 MetLife shares.

You should be able to use the spin-off wizard to perform the tax-free spin off and get a proper allocation of basis as well as the recording of ALL the Brighthouse Financial stock you should have received.  You then follow up by recording a sale of the fractional share.

Unknown

Bill Kline said:

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

the fractional portion of the spinoff is taxable for 32.02.

 What steps do I follow since Article ID: HOW23724 is out of date?

is there a wizard that I should use?

Tom Young

Bill Kline said:

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

You simply do a sale of stock. The per share selling price is $58. 71. You sell .545455 shares.


$58.71 x .545455 = $32.02.

NotACPA

Bill Kline said:

MetLife did a corporate spin off on 8/4/17 to Brighthouse Financial. I have 17 shares of MetLife   with distribution rate 1 for 11. giving me 1 share of Brighthouse and fractional share 0.545455 , cash-in-lieu of 58.71 or check for32.02. which is taxable.

I keep each stock as a separate account. I was expecting the spinoff to create another account. then sell share into its cash account.

the supplied 1099-b shows the fractional sale of Brighthouse stock.

any suggestions would be helpful

thanks Bill

Bill, the $32.02 is received from the sale of the fractional share ... and that receipt of the fractional share is NOT taxable.  Just as the receipt of the 1 sh of Brighthouse isn't taxable.

They're not taxable because you already OWNED Brighthouse ... it was just buried inside of MetLife.  Before you owned a whole pie named MetLife.  Now you own a partial pie named MetLife and a piece (the missing piece from that MetLife pie) that's named Brighthouse.   You didn't receive anything that you didn't already own.

The SALE of the fractional share might generate a Cap Gain or Cap Loss ... that's dependent upon your cost basis in the Brighthouse fractional share.  THAT's the only taxable event.