Home Quicken for Windows Investing (Windows)
Quicken Community is moving to Single Sign On! Starting 1/22/21, you'll sign in to the community with your Quicken ID. For more information: http://bit.ly/CommunitySSO

How to have correct cost basis in a corporate spinoff, e.g., Pfizer/ Upjohn/ Mylan transaction?

Everything I’ve read about how to handle a corporate spinoff in Quicken (Windows Premier subscription version — currently up to date with R. 29.22) doesn’t explain how to divide the cost basis correctly between the shares of the original company and the shares of the newly spun-off company. The ratio of how many shares of the new company — in this case, Viatris — to be received for each share of Pfizer has no bearing on the calculation of how to divide my cost basis in Pfizer — pre-spinoff — between the two companies, that is, the post-spinoff Pfizer and Viatris.

When a company does such a transaction, it files an IRS form that specifies how the original cost basis is to be split, and that’s what brokerage firms use to determine one’s cost basis in each of the two companies’ shares after the transaction closes. In the past I haven’t been able to figure out how to allocate the cost basis correctly in Quicken, and the result is that my cost basis in each of the companies involved in the spinoff doesn’t match what my brokerage accounts show.

For example, when an investor receives 1 share in the new company for each share of the pre-spinoff company, that doesn’t automatically mean that the cost basis is divided 50-50 between the two companies. And the closing prices of the two companies on the day the transaction is completed also have no bearing on the allocation of the cost basis between the two companies. (The allocation of the cost basis is generally determined by the original company’s accountants ahead of the closing, to enable the company to file the IRS form promptly and enable brokerage firms to correctly allocate the cost basis between the 2 now-separate companies.)

So, just how do I manage to get my Quicken records of the cost basis in each of the 2 companies’ shares, post-spinoff, to reflect the real cost-basis allocation determined by the company doing the spinoff — in this case, Pfizer?

This cost-basis allocation is important for tracking the post-spinoff investment performance of each of the 2 companies, but it’s also absolutely critical to having the correct costs for each individual lot of shares of the two companies for tax purposes (when one sells any of the shares.)
Tagged:

Best Answer

«134

Answers

  • FrankxFrankx SuperUser ✭✭✭✭✭
    edited November 2020
    Hi @A.R.

    I am not sure where you are getting your information, but this statement is untrue:
    A.R. said:
    (The allocation of the cost basis is generally determined by the original company’s accountants ahead of the closing, to enable the company to file the IRS form promptly and enable brokerage firms to correctly allocate the cost basis between the 2 now-separate companies.)
    The cost basis cannot be calculated until AFTER the spinoff takes place because, under IRS rules, the allocation is calculated based on relative fair market values of both the Parent company and Spinco after the spinoff is completed (usually based on the average high and low trading prices of both securities after the spinoff and reported on IRS Form 8937) .

    My experience with spinoffs and Quicken is that once the proper information, from Form 8937, is entered into the Corporate Securities Spin-Off screens, it matches (within pennies) of the information included on brokerage statements.

    Oh, one more clarification, it isn't the "original company's accountants" who "generally determine" values in a spinoff, nor are they responsible for it - the parent company officers are.

    Frankx


    Quicken H&B-Subscription - Ver. R29.20 - Build 27.1.29.20  - Windows 10 Home - Ver. 2004
                                             - - - - Quicken User since 1984 - - - 
      -  If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you.  -
  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    The share ratio DOES have a bearing on allocation of the basis to the spinoff.  The math is:
    FMVParent (fair market value of the parent on a per share basis)
    FMVSpin (fair market value of the spinoff on a per share basis)
    ShareRatio (number of spinoff shares rec'd for each parent share held)

    After Spinoff, Total Value = 1 x FMVParent + ShareRatio x FMVSpin
    Parent Portion = FMVParent / Total Value
    Spinoff Portion = ShareRatio x FMVSpin / Total Value 

    Those two portions are fractions that add to 1.00 (or 100%)

    Yes, the information presented with the IRS Form 8937 may simply get to the final percentages, but they are using all three terms to get there.  So is Quicken.

    The original basis of each lot of the parent is allocated between the parent and the spinoff per those portions. 

    Neither the investor nor their brokerage are obligated to use the values presented in the Form 8937 filing. 
  • A.R.A.R. Member ✭✭
    > @Frankx said:
    > Hi @"A.R."

    > The cost basis cannot be calculated until AFTER the spinoff takes place because, under IRS rules, the allocation is calculated based on relative fair market values of both the Parent company and Spinco after the spinoff is completed (usually based on the average high and low trading prices of both securities after the spinoff and reported on IRS Form 8937) .

    Not true. The IRS Instructions for Form 8937 — which you can find on irs.gov — specifically state (p. 1, under the heading “When to File”): “You may file the return BEFORE the organizational action if the quantitative effect on basis is determinable.” (Capitalization added for emphasis.). This is how, in the various spinoffs I’ve experienced, the cost basis adjustment by my brokerage firm to allocate the cost basis between the 2 companies is immediate.

    > Oh, one more clarification, it isn't the "original company's accountants" who "generally determine" values in a spinoff, nor are they responsible for it - the parent company officers are.

    Wrong. The parent company’s officers may sign the form 8937, but it’s the accountants that calculate the numbers regarding how the assets, liabilities, etc., are split up between the original company and the newly spun-off company. This is what makes the “quantitative effect on basis determinable” before the transaction has actually closed — or, to quote the Form 8937 instructions, “before the organizational action.”
  • FrankxFrankx SuperUser ✭✭✭✭✭
    Okay, so maybe you can enlighten me.  Do you have an example of a spinoff where - as you saying - the "quantitative effect on basis" was calculated based on the relative "assets, liabilities, etc." (to use your words) of the Parent and Spinco?  Or maybe you have an example of a Form 8937 where it is signed and dated before the effective date of the spinoff?  

    Frankx


    Quicken H&B-Subscription - Ver. R29.20 - Build 27.1.29.20  - Windows 10 Home - Ver. 2004
                                             - - - - Quicken User since 1984 - - - 
      -  If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you.  -
  • A.R.A.R. Member ✭✭
    > @q_lurker said:

    > The math is:
    > FMVParent (fair market value of the parent on a per share basis)
    > FMVSpin (fair market value of the spinoff on a per share basis)
    > ShareRatio (number of spinoff shares rec'd for each parent share held)
    >
    > After Spinoff, Total Value = 1 x FMVParent + ShareRatio x FMVSpin
    > Parent Portion = FMVParent / Total Value
    > Spinoff Portion = ShareRatio x FMVSpin / Total Value 

    Not correct — the formulae/ definitions you present presuppose that the allocation of cost basis between the original company and the spinoff company can’t be done until you have the FMVs of each company AFTER the transaction is complete (closed).

    However, as I just explained to “Frank,” the IRS Instructions for Form 8937 state that Form 8937 may be filed BEFORE the organizational action — that is, before the spinoff is completed — if the quantitative effect on basis is determinable. (Page 1 of the instructions, under “When To File,” continuing on page 2. See irs.gov for the instructions for Form 8937.). So, that mean this determination — before closing — can’t possibly use the FMVs of the two companies, since those aren’t know until after closing. And, indeed, in various spinoffs I’ve been through with various stocks I own, my brokerage firm does the cost allocation between the 2 companies immediately because they already have the official Form 8937 prepared by the original company.

    > Neither the investor nor their brokerage are obligated to use the values presented in the Form 8937 filing. 

    Whether or not one is obligated to use the values (the cost-basis split percentages) on the Form 8937, since that’s what my brokerage firm (a MAJOR national firm) uses to do the cost-basis allocation — which it then uses to report the cost basis when I sell shares of either company, and thus for the calculation of capital gain or loss — it is much easier to use the brokerage firm’s cost basis allocation for the many, multiple lots I’ve acquired in the original company. And those lots, by date, give rise to multiple lots of the spun-off company.

    So, in any subsequent sale of the shares of either company, it’s easier to use the cost basis that the brokerage firm will report to the IRS (which is also on the year-end tax statement in the section labeled 1099-B), than to use one’s own (different) numbers and possibly have the IRS computers flag one’s tax return due to a mismatch between what one reports as the cost basis and what the brokerage firm has reported.

    Anyway, you haven’t answered my question about how to get the cost basis for the various lots of shares of the two companies — the original company (post-spinoff) and the new, spun-off company — to agree with the numbers my brokerage firm shows when it does the cost-basis allocation.

    It’s very irksome to have Quicken show a different cost basis, and thus a different return, on a given holding, than what the brokerage firm shows. Furthermore, with an incorrect cost basis, Quicken’s calculations of the “tax implications” of a proposed sale will also be wrong.

    There ought to be a straightforward way of getting the two sets of numbers (brokerage and Quicken) to match. Otherwise, what’s the point of paying more for Quicken Premiere to track my investments in the first place?

    Downloading daily quotes is easy for the software to do, usually without very many errors (although they occasionally occur). The real test of a software program such as this is whether it has the flexibility to handle various corporate actions that can be quite complex in structure.

    I’ve been using Quicken Premiere since 2010, and I have several spinoffs that have occurred previously in which the cost basis wasn’t allocated properly because of the limitations of the software (such as not being able to input relevant factors because the dialogue boxes didn’t provide for such inputs). I would have thought that, 10 years later, it would have improved.
  • FrankxFrankx SuperUser ✭✭✭✭✭
    @A.R.

    Still waiting to see ONE IRS form 8937 that you have for a publicly-traded (i.e. listed) entity where it is signed and dated by a company officer before the effective date of the spinoff.

    Frankx


    Quicken H&B-Subscription - Ver. R29.20 - Build 27.1.29.20  - Windows 10 Home - Ver. 2004
                                             - - - - Quicken User since 1984 - - - 
      -  If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you.  -
  • Mark1104Mark1104 Member ✭✭✭✭
    edited November 2020
    @A.R.

    appears this will become clearer once the transaction closes on Monday

    please read this press release from Oct 30: 

    https://investors.pfizer.com/investor-news/press-release-details/2020/Mylan-and-Pfizer-Receive-Clearance-from-the-U.S.-Federal-Trade-Commission-for-Proposed-Combination-of-Mylan-and-Upjohn/default.aspx

    specifically:

    Upon completion of the combination, Pfizer stockholders as of the record date will own 57% of the outstanding shares of Viatris common stock, and Mylan shareholders will own 43% of the outstanding shares of Viatris common stock, in each case on a fully diluted, as-converted and as-exercised basis. The number of shares of Viatris common stock that each holder of Pfizer common stock as of the record date will receive will be determined based on the number of shares of Pfizer common stock outstanding as of the record date and the number of Mylan ordinary shares outstanding as of the trading day immediately prior to the closing date, in each case calculated on a fully diluted, as-converted and as-exercised basis.


    what I have seen in other complicated mergers / spin-offs, the investor relations page will discuss how to treat the cost basis - you are not the only one asking i suspect.  Let's wait until Tuesday and see what the Pfizer says about the cost basis of the spinoff. 

     there is a way to "force" the correct cost basis in Quicken using the RTNCAP transaction type, in case the calculations are too difficult for Quicken to handle. 





  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    @A.R. 
    I suggest you consider this statement (emphasis added) from the Pfizer information packet regarding this spinoff -- page 108

    • the aggregate tax basis of the Newco common stock (including fractional shares deemed received and exchanged for cash, as described below) distributed to a U.S. Holder or a Non-U.S. Holder of Pfizer common stock in the Distribution will be determined by allocating the aggregate tax basis of such holder in the shares of Pfizer common stock at the time of the Distribution between such Pfizer common stock and the Newco common stock received in proportion to the relative fair market values of such common stock immediately following the Distribution
    Regarding making Quicken match your brokers information, I'll reverse the math for you.
    BP = new basis of Parent, as a percent or a total $
    BS = total basis of Spinoff, as a percent or a total $, same as BP units
    SR = Share ratio, shares of spinoff received per parent company share held
    The first two would be identified from your brokerage information.  The Share Ratio would be as set by the parent company (Pfizer in this case).

    From those three: the ratio of the fair market values is
    FMVP / FMVS =  SR x BP / BS
    Choose or otherwise determine a FMVS or FMVP and calculate the other,
    Use FMVP, FMVS, and SR in the Quicken prompt screen for Corporate Spinoffs.  The actual values for FMVP and FMVS are not critical, it is the ratio of the two that is important.  After the entry, I would still eventually update the price history information for those two securities for the spinoff date (because I value net worth consistency)..  
  • W5JPW5JP Member
    The "Information Statement" that Pfizer issued to its shareholders on August 6, in connection with the spin-off discusses the tax treatment as follows (p. 108):

    • the aggregate tax basis of the Newco common stock (including fractional shares deemed received and exchanged for cash, as described below) distributed to a U.S. Holder or a Non-U.S. Holder of Pfizer common stock in the Distribution will be determined by allocating the aggregate tax basis of such
    holder in the shares of Pfizer common stock at the time of the Distribution between such Pfizer common stock and the Newco common stock received in proportion to the relative fair market values of such common stock immediately following the Distribution;

    While most brokerages utilize the average of the high/low prices immediately following the transaction to determine FMV for basis allocation, some use alternate approaches (such as closing prices). The "Corporate Securities Spin-Off" transaction in Quicken works correctly and should align with your broker IF you input the same FMV information that your brokerage does. As Tom points out, the basis gets re-allocated across ALL shares (including any fractional shares that arent' actually issued). It's important to be meticulous in accounting for such fractional shares (through a "Sell" transaction) for the basis to align.

    If the "Corporate Securities Spin-Off" transaction doesn't work for you for some reason, you can always "force" basis information by doing a manual remove/add shares combination to align completely with your brokerage firm. (This can get very tedious, however, if you have multiple lots and the "Corporate Securities Spin-Off is preferable if you input the same FMV information that your brokerage used.) If you must use the "remove shares"/"add shares" approach, be sure to insert the correct "date acquired" to maintain your short-term/long-term information. Note that in most tax-free spin-offs, the "SpinCo" will have the same "date acquired" as the original stock.

    It's a good practice to attach a copy of the announcement or other document describing the spin-off to the transactions that implement the changes. That way you'll never get confused about what was going on when you revisit years later...
  • splashersplasher SuperUser ✭✭✭✭
    Are the FINALIZED numbers available for this yet for those of us that don't want to argue the nits and bits of what can/might be done?
    -splasher  using Q since 1996 -  Subscription  -  Win10
    -also older versions as needed for testing
    -Questions? Check out the  Quicken Windows FAQ list

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    splasher said:
    Are the FINALIZED numbers available for this yet for those of us that don't want to argue the nits and bits of what can/might be done?
    The share ratio has been announced as "approximately 0.124079" shares of Viatris per share of Pfizer held (sounds pretty exact to me).  I have not yet seen Form 8937 values for fair market value estimates.  

    Pfizer opened on the 16th at 35.92 and Viatris at 15.64 per Yahoo finance.  Other prices from the 16th are also possible.  While one could use such values and make corrections later (if the Pfizer holding was a small number of lots), I suggest a bit more patience will be rewarded.  
  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    I haven't found Form 8937 yet.  Since my Pfizer shares are in one of my wife's IRAs where stock basis isn't terribly important I'm using the average of 11/16 high/lows to make the split.  One word of caution, the spinoff wizard has been changed (incorrectly in my opinion) because the IRR report wasn't calculating properly when a spinoff occurred.  So now instead of REMOVED and ADD entries you're going to see a string of RtrnCap and MiscInc entries, none of which will appear anywhere on any statement from any FI.
    Given the history of multiple RtrnCap transactions frequently messing up basis numbers I'm going to do the REMOVE and ADD entries by hand, which isn't too onerous in my case.

  • splashersplasher SuperUser ✭✭✭✭
    I've got 7 years of reinvested dividends, so almost 30 transactions to deal with.  I can wait till this whole thing gels further, I'm in no hurry.  I also want to see what Edward Jones does with the basis which will take a few days.
    -splasher  using Q since 1996 -  Subscription  -  Win10
    -also older versions as needed for testing
    -Questions? Check out the  Quicken Windows FAQ list

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
      I also want to see what Edward Jones does with the basis which will take a few days.

    FWIW, I have seen FIs offer one set of basis information early and then make further adjustments later. It appears to me that 5 to 5.5% of the Pfizer basis should transfer to Viatris. Be sure what you do see from the FI makes sense. 

  • splashersplasher SuperUser ✭✭✭✭
    EJ gave me $10.56 for the .65121 partial share which equates to a price of $16.22 which is a price from some point during the day of 11/17/20 looking at the price history on Yahoo.
    It will be interesting to see what they use for the price of Pfizer.
    -splasher  using Q since 1996 -  Subscription  -  Win10
    -also older versions as needed for testing
    -Questions? Check out the  Quicken Windows FAQ list

  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    q_lurker said:
    It appears to me that 5 to 5.5% of the Pfizer basis should transfer to Viatris. Be sure what you do see from the FI makes sense. 
    Using the average of the High/Low of the two stocks on 11/16 according to Yahoo Finance I came up 95.04% to Pfizer and 4.96% to Viatris.
  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    Tom Young said:
    q_lurker said:
    It appears to me that 5 to 5.5% of the Pfizer basis should transfer to Viatris. Be sure what you do see from the FI makes sense. 
    Using the average of the High/Low of the two stocks on 11/16 according to Yahoo Finance I came up 95.04% to Pfizer and 4.96% to Viatris.
    I saw the hi/lo numbers for 11/16 from Yahoo as 
    PFE 36.01 / 34.96 = Average 35.485
    VTRS 16.15 / 15.34 = Average 15.745
    Total Value = 35.485 + 0.124079 * 15.745 = 37.439
    PFE% = 35.485 / 37.439 = 94.782%
    VTRS% = 0.124079 * 15.745 / 37.439 = 5.218%

    Not to quibble about 0.2%, but am I off somewhere?
  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    q_lurker said:
    I saw the hi/lo numbers for 11/16 from Yahoo as 
    PFE 36.01 / 34.96 = Average 35.485
    VTRS 16.15 / 15.34 = Average 15.745
    Total Value = 35.485 + 0.124079 * 15.745 = 37.439
    PFE% = 35.485 / 37.439 = 94.782%
    VTRS% = 0.124079 * 15.745 / 37.439 = 5.218%

    Not to quibble about 0.2%, but am I off somewhere?
    I'd say that Yahoo changed their numbers from the time I picked them up to the time you saw them.  Here are the numbers off my spreadsheet:




    OPEN HIGH LOW CLOSE
    H/L Avg
    Viatris Inc  11/16 15.64 16.15 15.34 15.86
    15.745
    Pfizer
    11/16 37.86 37.95 36.85 37.33
    37.400










    On today's historical quotes page for Pfizer, running from 11/19/19 to 11/18/20 I can't find "37.86" or "37.95" anywhere on the entire page.  The "36.85" amount shows up as an 8/24/20 Close and as a 12/17/19 Low.  The "37.33" amount also shows up twice on that page, on two different dates, once as an Open and once as a High. Oddly enough the Viatris numbers remain the same.

    I know I'm probably more error prone than I used to be and I wouldn't be surprised if I used the wrong date for Pfizer or maybe did something like slipping to the right and picking up the High/Low/Close/Adj. Close, but that just doesn't seem to be the case.
  • W5JPW5JP Member
    Like other FIs, Schwab still has not adjusted basis in these stocks...

    I could be mistaken, but I believe we should be looking at the prices from November 17th - not the 16th. Pfizer's press release on 11/16 announced transaction completion and that VTRS would begin trading on the 17th. (I realize that price history for VTRS is available well before the 17th but those prices probably reflect trading on a "when issued" basis.) Assuming that your FI utilizes the Hi/Lo Avg method of determining FMV, the computation based on 11/17 data would look like:

    11/17 High Low Average
    Viatris: 17.93 15.30 16.615
    Pfizer: 36.50 35.82 36.16

    Total Value = 36.16 + (0.124079 * 16.615) = 38.221572
    PFE% = 36.16/38.221572 = 94.60626%
    VTRS% = (0.124079 * 16.615)/38.221572 = 5.39374%

    I'm waiting to enter until I see what my FI produces...
  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    Since the "merger complete!" announcement went out before the start of trading on the morning of the 16th I might argue that the trading on the 16th is the "better" determiner of FMVs immediately after the transaction.  But at some point we'll see what information the Form 8937 uses, and what numbers the brokers end up using.
  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    Tom Young said:
    q_lurker said:
    I saw the hi/lo numbers for 11/16 from Yahoo as 
    PFE 36.01 / 34.96 = Average 35.485
    VTRS 16.15 / 15.34 = Average 15.745
    Total Value = 35.485 + 0.124079 * 15.745 = 37.439
    PFE% = 35.485 / 37.439 = 94.782%
    VTRS% = 0.124079 * 15.745 / 37.439 = 5.218%

    Not to quibble about 0.2%, but am I off somewhere?
    I'd say that Yahoo changed their numbers from the time I picked them up to the time you saw them.  Here are the numbers off my spreadsheet:




    OPEN HIGH LOW CLOSE
    H/L Avg
    Viatris Inc  11/16 15.64 16.15 15.34 15.86
    15.745
    Pfizer
    11/16 37.86 37.95 36.85 37.33
    37.400











    Comparing your Hi/Lo (older Yahoo) to my Hi/Lo (current Yahoo), my values both appear to be 94.88% (+/- 0.01%) of your values.  I think Yahoo is now showing the post spinoff adjusted values for PFE.  (sigh)

    What currently downloads into Quicken is
    Hi        35.9501
    Lo       34.9080
    Close  35.3627
    The fact that those are 4-decimal place precision suggests they are 'adjusted' values.  If anyone downloaded prices on the 16th into Quicken, I'd be interested in seeing those prices.  They should not have been overwritten by later changes (AFAIK).

    I suggest Tom's original values are likely closer to the true values to use.
  • splashersplasher SuperUser ✭✭✭✭
    I normally only update prices after 6:30PM EST.
    I looked at the price history for PFE prior to doing today's update (early, just for you) and the first is what was from yesterday.  The second is as of today at 4:45PM EST.





    I only use the Update button on the portfolio screen  to get prices for what that is worth.  I see where the 11/13 and after quotes were retroactively changed in the second screenshot.
    -splasher  using Q since 1996 -  Subscription  -  Win10
    -also older versions as needed for testing
    -Questions? Check out the  Quicken Windows FAQ list

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    @splasher -- thanks for that before and after.  

    The first block (before) for the 16-17-18 dates only shows closing price; lacking Hi, Lo, or Volume values.  That suggests it was information from your brokerage.  I note your closing on the 16th of 37.33 agrees with @Tom Young's earlier closing value.  

    The second block with three additional values suggest the data was from Quicken's data supplier.  Per the defined hierarchy (https://www.quicken.com/support/how-update-security-prices), the original data from the FI should have been (and apparently was) overridden by the data supplier info.  That block appears to be presenting values adjusted for the spinoff considerations.

    My question back to you -- Does it make any sense to you that your 'updates' on the 16th, 17th, and 18th would not have included a price update from Quicken's data supplier (Download Quotes feature)?
  • splashersplasher SuperUser ✭✭✭✭
    I never include download quotes during an OSU run.  I only update the quotes after 6:30 PM EST (today was early because of the earlier post) and I do them from the Portfolio screen using the Update button at the top of the Portfolio.  I can't explain why the 16th & 17th had no high/low/volume entries, I did not deviate from my normal routine on those days.
    -splasher  using Q since 1996 -  Subscription  -  Win10
    -also older versions as needed for testing
    -Questions? Check out the  Quicken Windows FAQ list

  • AWinTxAWinTx Member ✭✭
    After reading this, I noticed Fidelity had the cost on my Pfizer lots already adjusted. I only had 5 lots so I removed the shares on 11/17 (I did it by each lot but probably could be done in one transaction), and added shares with the new costs and the original dates that were reflected on Fidelity. That way, it didn't mess up my recent sales' cost basis.
  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    AWinTx said:
    After reading this, I noticed Fidelity had the cost on my Pfizer lots already adjusted. I only had 5 lots so I removed the shares on 11/17 (I did it by each lot but probably could be done in one transaction), and added shares with the new costs and the original dates that were reflected on Fidelity. That way, it didn't mess up my recent sales' cost basis.
    To be clear, I take it you added the 5 lots of Pfizer with their new adjusted down cost basis and you added in 5 lots of Viatris.  The Viatris lots got the cost basis that was reduced out of the Pfizer lots and acquisition dates the same as the Pfizer lots.  That is a valid approach (IMO).


  • AWinTxAWinTx Member ✭✭
    edited November 2020
    > @q_lurker said:
    > (Quote)
    > To be clear, I take it you added the 5 lots of Pfizer with their new adjusted down cost basis and you added in 5 lots of Viatris.  The Viatris lots got the cost basis that was reduced out of the Pfizer lots and acquisition dates the same as the Pfizer lots.  That is a valid approach (IMO).

    Sort of... on Fidelity's website, it shows the same 5 lots with the adjusted cost. Quicken, however, showed it as one transaction (EDIT: for Viatris) with the costs and shares totaled up and the cost averaged. I can live with this because as you say, it was the "cost basis that was reduced out of the Pfizer lots". Since I plan on holding these shares over a year, I'm not incentivized to break down those lots to match Fidelity. In addition, I'm afraid of the negative consequences of back-dating the shares when they were not traded and didn't have share prices.

    Thanks for the feedback.
  • Rick8Rick8 Member ✭✭✭
    Form 8937 info:
    As part of the new cost basis reporting rules, corporations are now required by law to inform their stockholders how to calculate adjustments to their cost basis caused by corporate actions such as splits, spinoffs, issuance of stock rights, mergers, etc. Corporations are also now required to file a new Form 8937 "Report of Organizational Actions Affecting Basis of Securities" with the IRS. This information must be provided no later than January 15 of the next calendar year or 45 days after the corporate action, whichever is earlier.

    Companies may meet this disclosure requirement by posting the information on their website. The information must remain publicly available for ten years. Every tax accountant in the country is thankful for this useful new common sense requirement which will make life easier.

    Many companies will simply post the Form 8937 by itself. The relevant section to look for is line 15 where the cost allocation factors should be given.

    When the spinoff is a taxable distribution, companies are not required to post Form 8937 since the cost basis of the parent company stock was not impacted. Also, Form 8937 is not required for corporate inversions or mergers of partnerships such as MLPs. However, helpful corporations will post information on their Investor Relations website to provide guidance.
  • sblakesblake Member
    I was able to match the basis for the old and new after the spin off to my brokerage account (Fidelity) to the penny using the input information attached. I then did a sell for the fractional shares using the $ amount of the in lieu of fractional shares as the sales price and let Quicken figure the price. It balanced. Hope this helps. I guess it is possible that different brokers may figure it differently but this worked for me.
Sign In or Register to comment.