Merck spinoff of Organon - thread for all related questions/comments

splasher

Please use this thread to consolidate any/all questions and answers for the Merck spinoff of Organon.

G. Scott Phillips

Thanks so much for creating this thread. Could someone please tell me exactly how to enter the Organon spin-off transaction into Quicken? I received 28 shares of Organon and $29.89 in cash. Thanks again!

splasher

You will do a "Corporate Securities Spin-Off" transaction.
Do not create the new security yet, the above transaction will create it.
The new shares per old share will be .10 (1/10th).
You will need to wait to do this until someone comes up with the appropriate old and new share prices which have not been published yet.
The spin-off will generate a fractional share which you will get cash for and you will need to sell that fractional share for the appropriate cash amount (info from your FI).

The bottom line to this is, patience.  Wait for the numbers and do this once and get it correct.
Another thing, make a backup before you do this so that if the results aren't correct, you can restore and get back to where before you were doing the spin-off.

splasher

NOTE: I can't stress this enough, you really want to wait for the numbers since the spin-off creates a RtrnCapX and a MiscIncX for Merck and an "Added" shares & basis for Organon for every lot of Merck, in my case that is 35 transactions (lots of reinvested dividends).

So wait for the correct share prices.

vikingsail

Merck needs to issue the form 8937 which will have all the information you need, note it usually takes about 2 weeks for this form to be issued. See pfizer viatris spinoff for an example.

GermanBlueRam

Somehow I hadn't even noticed this in the news, leading up to spinoff. I have 100 shares of MRK and now I have 10 shares of OGN. Per fidelity.com, my cost basis per share in OGN is $36.34. My previous cost basis in MRK was $76.23, and now it is $72.60.

splasher

GermanBlueRam said:

Somehow I hadn't even noticed this in the news, leading up to spinoff. I have 100 shares of MRK and now I have 10 shares of OGN. Per fidelity.com, my cost basis per share in OGN is $36.34. My previous cost basis in MRK was $76.23, and now it is $72.60.

Good info for Fidelity clients in that the basis of Merck is decreased by the amount assigned to Organon, hopefully Edward Jones will finalize their basis #s soon and it lines up with the official Merch/Organon documents.

q_lurker

I recently updated my position on the Corporate Spinoff macro-transaction.  They fixed (sometime) a minor glitch and apparently took a step forward on another issue I raised but not wholly to my satisfaction.
https://community.quicken.com/discussion/7882806/corporate-spinoff-in-r29-9-and-later-editions#latest

For anyone heading this direction - be sure to have a good backup or copy available first.

GermanBlueRam said:

Somehow I hadn't even noticed this in the news, leading up to spinoff. I have 100 shares of MRK and now I have 10 shares of OGN. Per fidelity.com, my cost basis per share in OGN is $36.34. My previous cost basis in MRK was $76.23, and now it is $72.60.

Your numbers suggest that your cost basis for the 10 shares of OGN became $363.40 and that the MRK 100 shares lost $363 in cost basis.  Those are close but should match exactly.  That is one reason I prefer to talk about the entire lot rather than per share.  

If you know the two cost basis figures after the spinoff, then there is a fixed ratio between the fair market values (share costs) for the two stocks
Price(OGN) / Price (MRK) = Cost Basis(OGN) / [Cost Basis(MRK) x Share Ratio]
In your case:  Price(OGN) / Price (MRK) = 363.40 / [7259.60 x 0.1] = 0.500579
Choose a price for MRK on 6/3 (say its close of 73.91, the corresponding price for OGN is 0.500579 x that chosen value (36.998).  Using those two values in the data entry window for the Corporate Spinoff should result in the appropriate cost basis values for both stock lots.

When Merck issues the IRS Form 8937 for this transaction, they likely will offer fair market values to use.  Those values may or may not match with what your brokerage uses.  Your choice on how to deal with it.

At this point, I can support the use of Quicken's Corporate Spinoff as I show below (using @GermanBlueRam figures).

The popup form
      

Should result in three transactions (for a one-lot holding)


I would choose to delete the second transaction (MiscIncX) and edit the first transaction in-line to get to:


Note that the Fair Market value on the RtrnCapX transaction has been changed to 369.98 corresponding to the fair market value of the 10 shares of OGN received (36.998 * 10).   

If you have multiple lots of MRK to begin with, you will need to check that each lot of MRK has been properly decreased and each lot of OGN has been properly created (right cost basis value for each).

"G. Scott Phillips" said:

Thanks so much for creating this thread. Could someone please tell me exactly how to enter the Organon spin-off transaction into Quicken? I received 28 shares of Organon and $29.89 in cash. Thanks again!

Your data and cash info suggest you held about 288 shares of MRK going into this and were due to receive then 28.8 shares of OGN.  Since they did not distribute fractional shares you got 28 shares and 29.89 in cash.  

You would go through exactly the same process I outlined above with Quicken generating the 28.8 shares of OGN in your account.  Then you would sell the fractional share for the $29.89 cash-in-lieu received.  

Caryl

When I did the One Step Update on Quicken the other day it added Organon to the three accounts that have Merck. However, it left the cost basis column empty. I looked at the different accounts on the Fidelity website and there is a different cost basis for each one. Should I delete the added Organon on all the accounts and instead use the Corporate Securities Spinn-off?

splasher

@Caryl
Using the transactions downloaded from the financial institution will probably get you the correct QTY of Shares correct, but it will probably not get the Cost Basis and Return of Capital correct for both Merck and Organon.
If you care about the Basis of both securities, I'd delete any existing transactions for the two since the day of the split along with removing Organon from the security list since the Corporate Securities Spin-off will add it to the list for you (in fact it will complain if it pre-exists).

GermanBlueRam

Good stuff, @q_lurker and @splasher - much appreciated.

canoe32

Vanguard has now updated my basis for both Merck and Organon. The total basis for 20 shares of Organon was $3.43 less than Quicken calculated using the closing prices. Time to make a backup copy  and edit Quicken's entries.

joev929

> @splasher said:
> You will do a "Corporate Securities Spin-Off" transaction.
> Do not create the new security yet, the above transaction will create it.
> The new shares per old share will be .10 (1/10th).
> You will need to wait to do this until someone comes up with the appropriate old and new share prices which have not been published yet.
> The spin-off will generate a fractional share which you will get cash for and you will need to sell that fractional share for the appropriate cash amount (info from your FI).
>
> The bottom line to this is, patience.  Wait for the numbers and do this once and get it correct.
> Another thing, make a backup before you do this so that if the results aren't correct, you can restore and get back to where before you were doing the spin-off.

joev929

Just received paperwork from Shareowner Services with Organon shares, no price per share with a settlement date of 6/2/21. However there was also a letter from Organon which shows this is effective for shareholders of record as of 5/17/21, closing price was $34.10 that day. Would 5/17 be the actual date to use for this spinoff. Also in other paperwork Merck was treating it as "a special dividend," does that enter the picture in any way? Thanks

canoe32

I had done the "Corporate Securities Spin-Off" a few days ago using the closing prices, knowing that it might require tweaking later. I had round lots, so at least there was no fractional share to deal with. The "tweaking" was easier than I expected.

canoe32

The date 5/17/21 for "shareholders of record" is the date after which, if you bought Merck shares, you would not receive Organon shares. If you held Merck shares on or before that date you would receive Organon shares. It is not the date of the spinoff, which was 6/2/2021. The "special dividend" does not matter to Quicken. 

vikingsail

8937 information now available https://www.merck.com/investor-relations/organon-resources/

q_lurker

vikingsail said:

8937 information now available https://www.merck.com/investor-relations/organon-resources/

Thanks for that link.  That data uses essentially the same values cited above (June 6) -- $73.91 and $37.00 vs my (chosen) $73.91 and (derived) $36.998. 

As also stated in the form 8937, it is the investor's decision as to what fair market values apply.  So while you might want to use those values, you might still want to use other values more compatible with your financial institution choices. 

Michael Farley

Q_lurker, my financial account website answered my previous question. Deleted.

joneisenberg

Whilst this post is (if one looks closely) under Q for Windows, just a note for other users that this spinoff macro is not yet available in Q for Mac.

Lyn Buddenhagen

My Mac version of Quicken does not seem to have a "Corporate Securities Spin-off" transaction type. How can I adjust my Merck and Organon to reflect this spinoff properly? I am using Version 6.4.5 (Build 604.41859.100) and my operating system is macOS 10.15.7.

q_lurker

Lyn Buddenhagen said:

My Mac version of Quicken does not seem to have a "Corporate Securities Spin-off" transaction type. How can I adjust my Merck and Organon to reflect this spinoff properly? I am using Version 6.4.5 (Build 604.41859.100) and my operating system is macOS 10.15.7.

Lyn:  I am not familiar with the available transactions in the Mac version but some form of removing the Merck shares and Adding both Merck and Organon shares with their correct basis and acquisition dates should accomplish the goal. 

Lyn Buddenhagen

Whew, kept working on it and a Return of Capital for each Merck lot and an Add Shares for the corresponding ORG lot seems to work (there is a place in the Add Shares for tax acquisition date, which stays at the original Merck acquisition date). Thanks for your prompt response!