How do I record a Distribution Spinoff

egp

Working with Quicken 2018, I track my Roth IRA, recently one of my stocks did a "Distribution Spin-off" and created a new company giving me 1 share of stock, a few days later they did a "In Lieu of FRX Share Spin-off" and paid $10.00 in cash to me. How do I record these transactions

Tom Young

What you should be able to do is to use the Quicken spin-off wizard ("Corporate Securities Spin-off" action) to record the spin off.  You'd enter how many new shares you should have received for each share of the parent company you owned, and you'd enter the closing prices of both securities at the date of the spin off.  That would result in you owning 1.XXX (i.e., one whole share and a fraction of a share) of the new company.  Then you'd sell the ".XXX" fraction for the $10.00 in cash, maybe resulting in a small gain or loss, and leaving you with one share of the new company and $10.00.

Why don't you tell us the names of the two companies involved so somebody can put more precision into these instructions, i.e., what share ratio to use and the two cost figures.

egp

The two stocks involved are ticker O Realty Income Corp, which spun off ONL Orion Office REIT INC COM (ONLY) (Cash Only).

On 11/15/21, O Realty Income spun off Orion Office, on my Fidelity transaction history, it reads: DISTRIBUTION SPINOFF FROM:(O ) ORION OFFICE REIT INC COM (ONL) (Cash) , the approximate price of Realty Income at close is $71.6384. My cost basis of Orion is $21.30, I have one share.

Then on 11/17/21, I am showing the following: IN LIEU OF FRX SHARE SPINOFF FROM:(O ) ORION OFFICE REIT INC COM (ONL) (Cash) and a cash deposit to my account of $5.19.

Now, earlier today, I let Quicken update my Fidelity account, normally I manually enter things, it lists the following transactions:

11/15/21 RtrnCapX for Realty Income
11/15/21 MiscIncX Realty Income Transferred 70.57 x 12.261 share cash amount $70.57 $198.84
11/15/21 Div Realty Income $2.94
11/15/21 ReinvDiv Realty Income .41 shares @ $7.170732
11/17/21 Stksplit Orion Office Reit Inc 2 for 1 split

I do show that on 11/17 $5.19 was deposited in my Fidelity Account from the In Lieu of transaction.

q_lurker

How many shares of Realty income did (do) you own?  It appears to be 12.261 shares (before the ReinvDiv).  I'll proceed on that assumption.

The spinoff was a 1-for-10 ratio entitling you to 1.2261 shares of Orion Realty for your 12.261 shares of Realty Income.  Since fractional shares were not actually distributed, you received the (1) share and received the $5.19 cash in lieu of the 0.2261 shares of Orion that were not passed on to you.  That computes to a $22.95/share rate which is consistent with ONL opening pricing.

In Quicken, you want to spinoff (Corporate Security Spinoff) Orion Realty from Realty Income at a share ratio of 0.1 which would show you as getting the 1.2261 shares of Orion, and then you sell the 0.2261 shares of Orion for the $5.19.  (More on the spinoff action to follow).

The ReinvDiv transaction I am not clear on.  Fidelity is known to download both a Div and a ReinvDiv when only the second is necessary.  The dividend records for Realty Income show a November 1 payment of $0.228682/ share.  On 12.261 shares that would be $2.80 <> $2.94.  Thus my confusion.  Did your holding of Realty Income actually change in November due to a reinvestment?  When and by how many shares?  It may be significant that the spinoff applied to shares owned as of November 2.  So whether you were credited with the reinvestment November 1, or after November 2 can change the flow of the numbers.

Have you been reinvesting Realty Income dividends all along?

The current Corporate Spinoff actions has some issues for multi-lot holdings.  Those issues may or may not be significant for you - they involve the cost basis of the lots of the parent company (Realty Income).  If we can establish all your real world transactions first, we can perhaps come up with something workable for the Quicken representation.