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Need step by step instructions for recording the GE spin off of GEHC Healthcare (edit)

stgd

of Healthcare GEHC symbol.

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q_lurker

Frankly, it is a touch early to be getting into the nitty gritty details. It appears to be a straight 1-for-3 spinoff -- 1 share of GEHC for every 3 shares of GE held. But to effectively get the details right one needs to know the fair market values of the two companies (GE and GEHC) on the first day after the spinoff (on Jan 4, 2023). GE and GEHC will cone to an agreement on that and suggest values. That could be published as much as 6 weeks from now (Form 8937). Brokerages and investors are free to make their own determination, but the investor typically needs to or wants to follow the brokers lead.

If you have a real need to have something in your data now, enter one Add Shares of GEHC adding in 1/3 of your total GE share count in each applicable account. You may need to redo (delete) that later when better info becomes available.

jondio

The spin off was 1 share of GE Health Technologies for every 3 shares of GE.

stgd

Since i wrote this question, I discovered a Quicken transaction labeled Corporate spin off of new securities. It seems this fits and should work, but i dont have 100% trust in Quicken based on past experience. Yes I would follow brokers lead on cost basis, but they dont know either as of now.

q_lurker

The corporate spin-off can be suitable but opinions on it do vary. It still requires the correct info which is not yet fully available.

MauryJ

Well, my download today (Q Premiere Mac) doubled the number of shares of GE.
In my Portfolio View Quicken kept my original holding (when exploded, shows my dividend reinvestments) and Entered a second line, with almost (keep reading) the same # of shares at zero cost. The total number of shares is fractionally different, probably because the number of shares generating the 1 for 3 spinoff wasn't divisible by 3.

It did add in the GEHC shares in whole numbers, so I'm assuming the difference above is what to do with the odd extra GE share that couldn't spin off anything. I was given the excess in fractional GE shares. That part is fine, but now what? See if this solution makes sense:

1) Determine the extra fractional share of GE by subtracting my original holding from the new holding. In my case the new, zero cost holding is 0.317 more GE shares than I started with
2) Create a transaction that adds 0.317 shares to the original position
3) Either a) Remove the added extra GE shares, or b) Delete the transaction in the register that created this new position
4) I'm not touching the new GEHC shares

Doing it this way preserves my dividend reinvestment history. Should I give this more time to settle out? Right now the double GE shares is skewing my account value, although it's not that big of a position

Getting the # of shares right and preserving the reinvestment history is more important to me than an accounting of exactly how much cost to apply to the 2 entities (GE and GEHC). I don't really worry about whatever the correct way of recording this from a cost accounting standpoint since this is in an IRA and it's a relatively small position.

stgd

If I use ADD Shares to GEHC , which seems to make sense, Q asks what did you pay for the shares. How about the closing price after day 1 of trading? i thought that was the GE suggestion anyway.

mshiggins

I suppose I’ll have to deal with this corporate action eventually, but will wait for the 8937 before proceeding.

q_lurker

@MauryJ -- No. I don't see anything in your post that really makes sense. And my second rule in these event is don't trust what gets downloaded from the brokerages. (My first rule is Be Patient.)

There should be no changes to your GE holdings in terms of shares. A big IF - If you hold these shares through a DRIP-style reinvestment plan where they credit you with fractional shares, there may be some nuance. but fundamentally, if you own 99 shares of GE, you get 33 shares of GEHC. 100 GE --> 33 GEHC + some cash. 101 GE --> 33 GEHC + a little more cash. Whatever GE shares you owned, divide by 3, drop the fraction, that's how many GEHC you get. The cash amount will be 1/3 or 2/3 of the value of one GEHC as GE determines a few days after the event. Since GEHC is trading in the $60 range, the CIL Payment will likely be in the $20 or $40 area. That is the way a 1 for 3 spinoff works. Those cash amounts are called cash-in-lieu and may be abbreviated CIL. They usually show up a few days after the actual spinoff.

I also know nothing about how QMac handles or can process this type of event. You'd be better off posting in one of those areas.

@stgd -- An Add Share transaction is the right broad direction. If you have multiple lots of GE, strictly speaking it should be multiple Add Shares. Your cost of those shares is NOT the cost of one GEHC share on the next day. A portion of your cost for your GE shares gets transferred to your new GE holding. It could be 5% or it could be 50%. My ballpark guess at this time is that it will be about 20-25% of the GE basis that gets transferred to the GE holding.

The reason to be patient and do this once is that with the basis being transferred from GE to GEHC, the basis of the GE holding has to (should) get reduced. If all you care about is current valuation, you can certainly do one Add Shares. If you expect anything from Quicken in terms of tax information or long term investment performance, more info is needed.

With the forthcoming additional GE spinoffs, getting this stuff right the first time is really valuable, IMO.

prestonforman

I tried to use the spin-off wizard and discovered that GE is not listed as a stock from the pull-down menu. Anyone experience this?

MauryJ

@q_lurker - Thanks for all that info.

Looking at the account in the broker's web site I got cash in lieu of shares for the excess. I think the problem has something to do with the file conversion from Windows to Mac.. Even though I did file maintenance before converting, that file goes back many years and many Q-Win upgrade conversions and sometimes stuff gets wiggy.

This is weird. The Mac Portfolio View for the rogue acct shows the right # of shares on one line, and a slightly wrong number on a different line (it would at least make sense if I just showed the one line item and explode it to show incremental additions. The extra shares should show up there, but they don't.

When I go to the register there's a "Shares Added" action for GEHC, but there's nothing added for the rogue GE shares. So, the extra shares show up in my account, they show up in the aggregate view, but there's no entry for them. When I look at the account total, or even all of my accounts and sort by equity, it shows GE twice, and it's over reporting the shares in the totals. There's no transaction for me to delete, so I have nothing I can tie to that line that I want removed in the portfolio view. I'm going to have to call Quicken.

stgd

Charles Schwab reporting on GEHC cost basis is that GE will determine the cost basis for GEHC and revised basis for GE (lower) and let the investing world know within 45 days. Once these figures are known, the challenge will be to revise Quicken's cost basis for all the old GE lots . What would be the approach?

mshiggins

stgd said:

Charles Schwab reporting on GEHC cost basis is that GE will determine the cost basis for GEHC and revised basis for GE (lower) and let the investing world know within 45 days. Once these figures are known, the challenge will be to revise Quicken's cost basis for all the old GE lots . What would be the approach?

This is why the recommendations were to wait awhile, like until the 8937 is issued, before entering the spin off in Quicken.

The approach you take to redo the corporate spinoff will depend on the number of lots of GE you had before the spinoff. If just a few lots, adjust the cost basis for each of the Add Shares transactions generated by the Corporate Spinoff transaction. If there were many lots of GE, delete all the Add Shares transactions and the Remove Shares transaction, then re-enter the Corporate Spinoff transaction with the corrected ratio.

Charlie R

Every time this happens we all go through the, what just happened. I have been with Quicken for many yrs. and I always have to work overtime to get a spinoff to agree with Quicken, you don't need Quicken to take the financial institution's numbers, you need them to keep them honest. I just wait and hope for the best. I tried using numbers posted by other members but they never work for all of my accounts which are not all with the the same broker. I am wishing and hoping. GOOD LUCK TO ALL.

Tom Young

mshiggins said:

The approach to redo the corporate spinoff will depend on the number of lots of GE you had before the spinoff.

While you MAY take different approaches here, you SHOULD be able to simply use the Corporate Securities Spin-off action, using the correct numbers. Based on the closing price of the stocks on 1/4/2023 - the spinoff took place 1/3/2023 - the split would be 77.69% left with GE and 22.31 % going to GEHC. (GE - $70.20, GEHC - $60.49). There's no cookbook definition of what "fair market value" is so what the Form 8937 may come to a different conclusion, but you are free to make your own decisions about FMV and make your entries right now.

So if you have only a few lots you could calculate the basis for the GE and GEHC lots outside of Quicken, do a Remove of all the GE stock, then do a series of Adds for each lot of GE and GEHC you end up with. But with "more than a few" lots it would be easier to use the Corporate Securities Spin-off action.

Boatnmaniac

In my online Fidelity account there was a message that the cost basis was determined after market close on 1/4.

Fidelity had initially downloaded an Add Shares transaction on 1/4 for GEHC with no cost. I updated that transaction to show $57.545125/share which is what Fidelity told me my cost basis is.
Fidelity also showed that my new cost basis for GE is $66.78/share. I then entered a Remove Shares transaction dated 1/4 for all my remaining GE shares and then entered an Add Shares transaction dated 1/4 for the same number of shares but with that new $66.78/share cost.

I'm not sure if that was the best way to do this or not. But I'm not too terribly concerned with cost basis since all of these shares are in an IRA account so there is no tax impact. I'm mainly interested in cost basis for performance tracking.

drewfenton

I just went in and updated the costs basis in each lot to what Fidelity says online now. And I put a memo in with the original numbers.

mshiggins

Tom Young said:

mshiggins said:

The approach will depend on the number of lots of GE you had before the spinoff.

While you MAY take different approaches here, you SHOULD be able to simply use the Corporate Securities Spin-off action, using the correct numbers. Based on the closing price of the stocks on 1/4/2023 - the spinoff took place 1/3/2023 - the split would be 77.69% left with GE and 22.31 % going to GEHC. (GE - $70.20, GEHC - $60.49). There's no cookbook definition of what "fair market value" is so what the Form 8937 may come to a different conclusion, but you are free to make your own decisions about FMV and make your entries right now.
So if you have only a few lots you could calculate the basis for the GE and GEHC lots outside of Quicken, do a Remove of all the GE stock, then do a series of Adds for each lot of GE and GEHC you end up with. But with "more than a few" lots it would be easier to use the Corporate Securities Spin-off action.

You left out the part where user @stgd asked how to redo the corporate spinoff with the correct ratio after having already done the corporate spinoff with the initial guesstimate numbers.

Edit to add:
I updated my post and your quote of my post to indicate the comment was for a redo of the corporate spinoff.

Tom Young

@stgd

I overlooked the "redo" aspect of your question and wrote a response that started with a clean slate.

If you have used the Corporate Securities Spin off and Schwab comes back with some different numbers there are a couple of approaches you could use.

The first is to go through and modify all of Quicken's entries. That would involve changing the return of capital dollar amount, the miscellaneous income dollar amount, and the basis amount(s) for the Added GEHC shares.

Alternatively, you could delete all the entries the spin off wizard created and do a new Corporate Securities Spin-off and start over. The easiest way to delete a bunch of entries in an Investment Account is to run a Banking > Transactions report, limited to the Account in which the spin off was recorded and the date of the spin off. You can then select all those transactions using the Windows convention of highlighting the firs transaction and then {Shift}-click on the last transaction. Right click on the selected items and delete transactions.

BACKUP the file first, in either case.

q_lurker

Links to the GE's Form 8937 for this deal are now located here:
https://www.ge.com/investor-relations/shareholder-services
under the GE HealthCare Distribution Ratio FAQs. It is the Attachment to the Form 8937 that has relevant details.

That submittal utilizes the opening values on January 4, 2023 as the applicable fair market values. You and your broker are NOT obligated to use those values and may choose other values as you or they see fit. Following GE's example, the values would be 68.41 for GE and 54.13 for GEHC.

So here is my process in detail as an example. I am using the same raw data GE used in the Form 8937 attachment except I have done it with 2 original lots of GE totaling the 1200 shares and $12,000 basis. My setup has two lots of 600 shares each with basis values of $5,400 and $6,600.

1. Corporate Spinoff Action using the applicable prices. I've used the Form 8937 prices here.

Image: https://us.v-cdn.net/6031128/uploads/editor/s8/87r66ibs44ky.jpg

2. That produces in this case 4 transactions.

Image: https://us.v-cdn.net/6031128/uploads/editor/ek/t6s0q8pjba2n.jpg

Note that the RtrnCapX produced totals the Inv Amt for the now two lots of GE Healthcare (that's good) and they match the Form 8937 data (that's good). The share GE Healthcare share counts are off slightly because the 0.333333 used on the spinoff form is not exactly 1/3.

3. Add the ticker to GE Healthcare.

Image: https://us.v-cdn.net/6031128/uploads/editor/zu/e40obmrkv5fh.jpg

3a. I take a sidebar moment here to look at the Investment Performance Report.

Image: https://us.v-cdn.net/6031128/uploads/editor/bg/agqudgpsr5wx.jpg

I see here that the Total Return reported on 1/4 for this event ($21,651.97) matches the Investment value added on that date for this event (at least within a penny. That appears to be good also since there is then no net effect on performance being introduced by this event.

4. My next step is to get the price history for GEHC updated including back to 1/4/2023. That changes the IPR in a not good way. No longer do the Return and Investment values on 1/4 for this event cancel out. Now Quicken is showing a net investment being made on 1/4. This is because the program is using the CLOSING value of GEHC (60.49) rather than the previously entered fair market value of 54.13. I also observe the the ending value now reflects a more current price of GEHC as of sometime today (1/13/23).

Image: https://us.v-cdn.net/6031128/uploads/editor/nc/whfmuc1kyezc.jpg

5. Applying corrections. I edit the RtrnCapX transaction to make the associated Market Value equal to what Quicken will use for the investment value of the Added GEHC shares. 400 shares x $60.49/sh close = $24,196.00.

In conjunction with that, I also delete the odd MiscIncX transaction Quicken introduced at the start and I edit the Add Shares for the GEHC shares to reflect the correct shares (200 on each lot).

Image: https://us.v-cdn.net/6031128/uploads/editor/dx/bbhtrig64wrf.jpg

6. My final set of transactions appear as:

Image: https://us.v-cdn.net/6031128/uploads/editor/96/ws6q7qilm0h5.jpg

The Investment Performance Report now appears correct and in balance.

Image: https://us.v-cdn.net/6031128/uploads/editor/67/4zw9i8alovnz.jpg

7. The aspect that is incorrect at this stage is the basis of the two lots of GE. The total basis for the GE lots is correct, but the individual lots are in error. For each lot, the basis should have been 79.13% of the original lot basis. (See GE Form 8937 attachment). those would have been $4,272.99 and 5,222.54 rather than the two values shown below. If motivated to fix that error, I would do a Remove Shares - Add Shares pairing the next day with the Add Shares identifying the correct basis. Demonstrating that basis error was my motivation for using two GE lots to start.

Image: https://us.v-cdn.net/6031128/uploads/editor/2e/q7fs59zrov8j.jpg

Excruciating detail. Hope this helps someone.

Tom Young

For historical context to @q_lurker 's post above....

Quicken's old spin-off wizard use to give correct accounting information for spin-offs: each old "parent" lot was correctly stated as to acquired date and new basis, and each new "child" lot was correctly stated as to acquired date and basis. This was achieved with a global Remove of the parent company's stock followed by a series of Adds for each restated parent company lots and each new child company lots.

The problem with this approach was that the IRR Performance report returned incorrect information when a spin-off occurred.

Rather than changing the IRR report, Quicken's response was to change the way the spin-off wizard worked, creating new Transaction List entries. The end result of their effort was that both the detail-level accounting and the IRR report are now wrong.

Quicken has been advised of the problem but there has been no response so far.

Ted Gallagher

> @q_lurker said:

> Excruciating detail. Hope this helps someone.

VERY helpful. Thank you :-)

q_lurker

In a related post, @MarkKWilliams asked about correcting the GE cost basis and he was referred to this discussion.

As @Tom Young there indicated, the only real way to correct the cost basis of each lot of the Parent company (GE) is via the Remove (all) Shares and Add Shares (by individual lot).

My tip in doing so when many lots are involved (as generated by dividend reinvestment plans, for example):

Enter Transactions Button
Shares Transferred between account selection
Choose the date(**) and security, all shares of the security
For the destination account, select the same account you are using.
The result of that action will be the Remove Shares transaction and all the Add Shares for all lots with the correct number of shares and acquisition dates already in place.
You final step is then to edit each of those Add Shares to change the basis (cost) to the correct value.

**Suggestion: To keep the Investment Performance Report accurate, date this correction the day after the spinoff, not the day of the spinoff.

That presumes you know the applicable cost basis of each lot, perhaps from a detailed report from the brokerage.
But if you only know that the basis is reduced to a percent of the original, you can still make quick entries. For example, if the new reduced basis is 79.13% (GE's Form 8937 value) of the original basis.

Edit the Add Shares transaction
Tab to the Total cost field.
Rt arrow to un-highlight the original cost value of that lot
Use the calculator icon or simply go *.7913 Enter (where the .7913 represents the percentage for reduced basis).
Couple of more Enters and on to the next Add Shares. (Much easier than typing in all that other information, IMO)

Of course if one is more interested in only the bigger picture, something similar could be done with a single Add Shares combining all lots. Just don't be short-sighted on this with other GE spinoffs coming down the road.

jswafa

Sure would be nice to be able to enter fractions like 1 for 3, instead of an approximation with decimals.

JMSOUNDER

I initially responded to the ATT spin-off discussion, received a response from q_lurker and I am in agreement with his conclusions. I have just found this comprehensive dissection of the spin-off process and it seems that q_lurker has identified the essential problem. The spin-off wizard appears to produce correct results with the exception of the final cost basis reduction in the GE price. This is due to using a different price for GEHC than the value defined in the wizard, as explained in the above analysis! It seems this should be a simple programming change and I do not understand why Quicken has been slow to update the program!
I would be cautious about using the spin-off wizard for GE stock at this time because GE is planning another spin-off in 2024! In the meantime, I simply added the correct cost basis for the GEHC using the 12/16/2022 GE cost basis x .2087. The new GE cost basis reduced by .7913, which is suggested in the GE 8937 sec filling. ( 12/16/2022 is the date GE used for the 1:3 distribution)
I wish someone would show me how to find out if Quicken is actively working this important problem.

q_lurker

JMSOUNDER said:

I initially responded to the ATT spin-off discussion, received a response from q_lurker and I am in agreement with his conclusions. I have just found this comprehensive dissection of the spin-off process and it seems that q_lurker has identified the essential problem. The spin-off wizard appears to produce correct results with the exception of the final cost basis reduction in the GE price. This is due to using a different price for GEHC than the value defined in the wizard, as explained in the above analysis! It seems this should be a simple programming change and I do not understand why Quicken has been slow to update the program!
I would be cautious about using the spin-off wizard for GE stock at this time because GE is planning another spin-off in 2024! In the meantime, I simply added the correct cost basis for the GEHC using the 12/16/2022 GE cost basis x .2087. The new GE cost basis reduced by .7913, which is suggested in the GE 8937 sec filling. ( 12/16/2022 is the date GE used for the 1:3 distribution)
I wish someone would show me how to find out if Quicken is actively working this important problem.

I appreciate the support, but seem to have a different conclusion.

The spin-off wizard appears to produce correct results with the exception of the final cost basis reduction in the GE price. This is due to using a different price for GEHC than the value defined in the wizard, as explained in the above analysis!

My findings are that the final overall cost basis of the GE security is correct. Only the lot-by-lot cost basis of a multi-lot original GE holding is incorrect. The total is correct but not the parts used to arrive at that total. This error has nothing to do with the GEHC price changing after the Spinoff transaction was initiated.

The problem associated with the GEHC price changing after the Spinoff entry is within the Investment Performance Report.

I wish someone would show me how to find out if Quicken is actively working this important problem.

I have no information that Quicken has acknowledged the problems or that they are actively working to correct them. Nor do I have any way to find such information.

Boatnmaniac

q_lurker said:

I wish someone would show me how to find out if Quicken is actively working this important problem.
I have no information that Quicken has acknowledged the problems or that they are actively working to correct them. Nor do I have any way to find such information.

I'm not sure how Quicken would or could address/fix this issue. It seems that just about every corporate spinoff and merger has it's own unique terms that makes a standardized spinoff or merger transaction solution in Quicken not only impractical but simply not possible. I've been through about a half a dozen spinoffs over the last 3 years and everyone of them ended up needing to be handled differently from the others. I usually watch how my broker manages it and then try to mimic it as closely as I can. It doesn't always work perfectly but it gets me in the ballpark of what I need.

stgd

Since the "old" GE cost basis has been changed to reflect the spin off of GE healthcare, does anybody know of a simple way to update the old GE cost basis in Quicken. I have many lots across multiple accounts , many years old, both before and after all the stock splits. I dont wanna make a huge project out of this. Thank You

mshiggins

Post is no longer relevant as the separate discussion has been merged into this discussion.

q_lurker

@stgd Minimal effort is tough to judge, sort of eye of the beholder situation.

For some, the immediate minimalist approach might be one Remove Shares transaction removing all GE shares followed by one Add Shares adding back in the same (correct) number of shares with the overall total cost basis. That then is all GE shares in one lot.

Future transactions then become more problematic. Does one repeat that Remove / Add pair with each dividend reinvestment? What about when sales occur?

That approach can also have some unintended consequences on various performance measures in Quicken.

If only current cost basis is important, that is possibly the minimal approach. If other considerations are in play, more info is needed.