How adjust cost basis for spinoff? QM 2020

RCinNJ

What is the best way to lower the cost basis of a stock? I own Synnex Corp which just spun off Concentrix Corp in a 1 for 1 spinoff. I read that this is a non-taxable event.

I can get the adjusted cost basis for both stocks from my brokerage account so I know the numbers I should enter. I made two purchases of Synnex and hence two different cost basis. Because of this there are also two different cost basis for Concentrix. However, I only care about dropping the cost basis on the original Synnex purchases so that QM doesn't show a loss when it is actually at a gain.

In searching for answers it seems in QW there is a category for "Corporate Securities Spinoff" but not in QM.

Thanks to anyone who can help!

QM Deluxe 6.0.1

Tom Young

@AWinTx

"2) Perform "Add" shares transactions on 12/01 of Synnex at half your cost for each original lot with the appropriate purchase date.
3) Perform "Add" shares transactions on 12/01 of Concentrix at the same cost and date in #2."

It's not the ratio of the stock spinoff that dictates the allocation of "old" basis between the parent and the child.  Instead it's the relative fair market value of your two holdings immediately after the spin off occurs.  That is:

FMV of holdings in parent/(FMV of holdings in parent + FMV of holdings in child) = percent of "old" basis allocated to parent stock

and

FMV of holdings in child/(FMV of holdings in parent + FMV of holdings in child) = percent of "old" basis allocated to child stock

In this particular case costbasis.com has come up with allocation factors based on 12/1/2020 closing prices of $105.00 for CNXC and $76.02 for SNX.  That is 42% of cost allocation to SYNNEX Corp and 52% allocated to Concentrix Corp.

At some point a Form 8937 should show up on SYNNEX Corp's site or Concentrix Corp's site that discloses what per share FMV's they suggest using.

Tom Young

@FredArthur

If you have Windows Quicken then you can use the spin-off "wizard."  You give Quicken the information it needs - number of shares of child stock received for each share of parent stock and the prices of the stocks immediately after the spin off - and Quicken does all the calculations and makes all the entries.  Apparently the Mac version simply doesn't have that capability.

Tom Young

If there's an "Add" and "Remove" action that's available to you using the Mac version, then an alternative approach - a pretty easy one in your case - is to Remove the Synexx stock on the date of the event and then do four Adds, two for Synnex and two for Concentrix.  You'd use the the same transaction date for all five entries and specify the acquisition dates for the lots as part of the Add actions. 

This is doable in Windows, maybe you can do the same for Mac.

AWinTx

@Tom Young is correct. Adding a little flavor to his comment. Since this is a 1:1 stock split, your original costs should be split between both stocks.

I just did the following which correctly reflects the cost basis and thus my gains:
1) Perform "Remove" shares on 12/01 of Synnex for the total of all your holdings on that day. Identify all your lots.
2) Perform "Add" shares transactions on 12/01 of Synnex at half your cost for each original lot with the appropriate purchase date.
3) Perform "Add" shares transactions on 12/01 of Concentrix at the same cost and date in #2.

As a side note, on 11/30, Synnex closed at $160.31. On 12/01, on Concentrix' investor site, they show it opened at $80.00. On Synnex's website, it shows it opened at $82.01. Yahoo Finance shows it closed on 11/30 at $65.33 and opened on 12/01 at $82.01. Even so, I think your costs are more important than the one day valuation.

Tom Young

@AWinTx

"2) Perform "Add" shares transactions on 12/01 of Synnex at half your cost for each original lot with the appropriate purchase date.
3) Perform "Add" shares transactions on 12/01 of Concentrix at the same cost and date in #2."

It's not the ratio of the stock spinoff that dictates the allocation of "old" basis between the parent and the child.  Instead it's the relative fair market value of your two holdings immediately after the spin off occurs.  That is:

FMV of holdings in parent/(FMV of holdings in parent + FMV of holdings in child) = percent of "old" basis allocated to parent stock

and

FMV of holdings in child/(FMV of holdings in parent + FMV of holdings in child) = percent of "old" basis allocated to child stock

In this particular case costbasis.com has come up with allocation factors based on 12/1/2020 closing prices of $105.00 for CNXC and $76.02 for SNX.  That is 42% of cost allocation to SYNNEX Corp and 52% allocated to Concentrix Corp.

At some point a Form 8937 should show up on SYNNEX Corp's site or Concentrix Corp's site that discloses what per share FMV's they suggest using.

FredArthur

@Tom Young What is step #1?

PetersJB

If the original security held was an aggregation from several separate purchases (different dates and prices), am I correct in thinking I would need to use pairs of Remove/Add Share transactions for each of this purchase dates? Doing otherwise would seem to lead to erroneous cost bases when the security is later sold.

Thanks for any input.

Tom Young

Since this is under a "Mac" category and I'm a "Windows" person all I can do is tell you how this would work in Windows Quicken and hope that the Mac programming follows suit.

Using Windows if you initiate a Remove transaction the window that opens up is very similar to a Sold action window; you can specify the number of shares Removed and specify what lots were removed.  So if you wanted to do a spin off manually you could do a Remove action for each lot, (specify a number of shares removed that matches a particular lot, then specify that lot as the lot removed), followed by two Adds; one for the reduced cost of the parent lot and then another for the basis allocated to the child lot.

But if I was doing this manually in Windows Quicken I'd figure out the allocations outside of Quicken, (e.g. Excel), and then just do ONE Remove for all the parent shares, then go back and do lot-by-lot Adds for the parent and child shares.  That would cut down on the work within Quicken.

PetersJB

Thanks Tom, that's exactly the plan I had. I've done the cost basis calculations off-line in Excel in order to populate the Add Shares transactions for each lot. Just wondered if I was missing anything, perhaps a simpler solution. I guess not.

FredArthur

If I have 15 years of quarterly dividend reinvestments recorded on the parent stock, I need to do a single REMOVE and then do 60 lot-by-lot ADDs representing the reinvested dividends? Isn't that something better done by a computer! It would be nice to tell Quicken what the new cost basis is and let it adjust all the open-lots.

Tom Young

@FredArthur

If you have Windows Quicken then you can use the spin-off "wizard."  You give Quicken the information it needs - number of shares of child stock received for each share of parent stock and the prices of the stocks immediately after the spin off - and Quicken does all the calculations and makes all the entries.  Apparently the Mac version simply doesn't have that capability.

FredArthur

@Tom Young - thank you. Very cool. I will try it first thing in the am.