Whats the best way to handle the United Technolgies merger ^& Otis, Carrier Spimmoffs?

United Technologies merges with Raytheon after spinning off Otis & Carrier - so each share of United gets one share of RTX and one share of Carrier & 1/2 share of Otis. How figure cost basis of each?

Best Answer


  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    edited April 2020
    I've wondered the same thing both with this situation and with other previous mergers and spin-offs, especially since it seems that the way the transactions get downloaded from the brokerage is a little different each time.
    My brokerage (Fidelity) downloaded the transactions for this situation as follows:
    • Sold 21 shares of UTX (United Technologies) @ $0.00 per share.
    • Bought 21 shares of RTX (Raytheon) @ $0.00 per share.
    • Added 21 shares of CARR (Carrier) @ $0.00 per share.
    • Added 10 shares of OTIS (Otis) @ $0.00 per share.
    My shares are held in a SMA IRA so the cost basis doesn't really matter for anything except for determining the overall performance of the entire SMA.  In that light it's all pretty much a wash as far as cost goes.
    But for those who hold the shares in a taxable account the individual securities cost basis is very important to the Schedule D report and for tax returns because the way this was done would show a 100% loss for the RTX shares (good for tax returns!) but when the other shares are sold it will show the entire revenue from the sales as being pure gain.  This is OK for 2020 tax returns if all of the new shares are liquidated in 2020.  But if those shares are held until a future year it will show a big capital gain and potentially a big tax liability.
    I suppose we could enter the end of day NAV prices for each of the stocks but it wouldn't be accurate because we don't know what time of the day these transactions actually occurred.  But it would be a better ballpark cost for Quicken than to use these $0.00 prices.  Regardless, the IRS will only be interested in what the brokerage ends up reporting on the 1099-B form(s).
    I'm really interested in hearing any tax experts weigh in to this.

    Quicken Classic Premier (US) Subscription: R55.26 on Windows 11

  • Burt
    Burt Member ✭✭
    Thanks for your reply. Best I can figure is as follows... owned 200 shares of UTC which will generate 200 sh of UTX - 200 sh of CARR - 100-- sh of OTIS. So, my cost of each is 2/5 of orig cost for UTX & CARR & 1/5 orig cost for OTIS. Now, how I get all thisl in Quicken is my challenge. Playing around with spinoffs & will see.
  • tvicki
    tvicki Member ✭✭✭
    There is more info about this under the question:
    How to treat UTX and RTX shares
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
This discussion has been closed.