How to enter taxable spinoff

Jean B

I have been a Quicken user for over 20 years. I am using US Quicken Home, Business and Rental Property R47.15 Build 27.1.47.15 on Windows 10 Home.

On December 1, 2023, Fidelity National Financial did a taxable spinoff of F&G annuities. How do I enter that into Quicken? I did not receive any transactions downloaded from Schwab regarding this transacaion.

I looked up on the Quicken Help at https://help.quicken.com/display/CAN/Record+a+corporate+spin-off+of+new+securities. The final note at the bottom was that this was for the Canadian version and to click HERE for the US. That webpage has no information whatsoever concering spinoffs, taxable or otherwise. So I took it to mean that it was the same so I tried to follow the below instructions.

Instructions were:
1. To record taxable corporate spin-off of new securities, enter the following transactions:
MiscInc "security name" "Amount"=Taxable distribution Amt, usually the value of shares spun off
Added "new security name" "number of shares" Basis=same amount as in previous transaction
2. Quicken enters a Remove Shares transaction for all shares of the parent company and a pair of transactions for each open lot of the parent company— an Add Shares transaction for the parent company and an Add Shares transaction for the spin-off company,
recorded with the same date as the spin-off date.

I selected Income and put the $261.89 value of the the 13.6 spunoff shares in Miscellaneous but didn't know what category to put it into. I Added the 13.6 shares for the new security with the total cost of $261.89. Then sold the .6 shares for $11.18. Of course, the cash in my account was off by $261.89 because I received the income but didn't actually spend it when I Added the shares.

What is the appropriate way to handle this transaction? Will it be added the the US Quicken On-Line Help or did I just miss where the information is being stored?

Thanks in advance for your help.

q_lurker

The Form 8937 for this event is (currently) available here:  https://www.investor.fnf.com/

That document indicates it is a taxable distribution and that "the taxable dividend distribution" will be included on the 1099-DIV for 2022.  Further, the document also states that the basis of the FNF holding is not changed by this spinoff.  

As such, my action would be to record a cash dividend from FNF on Dec. 1, 2022.  With that cash, I would then buy the applicable number of FG shares including any fractional shares due.   In Quicken, this is a DIV action, a Buy Shares action, and possibly a Sell Shares action.

The share distribution ratio is 68 shares of FG for every 1000 shares of FNF held.  The Form 8937 asserts a fair market value of the FG shares of $19.2565 per share on the date of the spinoff is most appropriate.  

Example: 
Owned 200 shares of FNF 
Received (due to receive) 0.068 * 200 = 13.6 shares of  FG
Value of received shares = $19.2565 * 13.6 = $261.89

Quicken actions
Div from FNF $261.89
Buy 13.6 shares of FG for $261.89
Sell 0.6 shares of FG for whatever cash-in-lieu amount received.  

I consider it likely but not absolute that FNF will be using the $19.2565 / share value in preparing the 1099-DIV forms.

(Caveat:  I am not a tax pro, CPA, enrolled agent or in any fashion qualified to offer tax advice, nor have I played one on TV.  Do your own due diligence.)  

q_lurker

The Form 8937 for this event is (currently) available here:  https://www.investor.fnf.com/

That document indicates it is a taxable distribution and that "the taxable dividend distribution" will be included on the 1099-DIV for 2022.  Further, the document also states that the basis of the FNF holding is not changed by this spinoff.  

As such, my action would be to record a cash dividend from FNF on Dec. 1, 2022.  With that cash, I would then buy the applicable number of FG shares including any fractional shares due.   In Quicken, this is a DIV action, a Buy Shares action, and possibly a Sell Shares action.

The share distribution ratio is 68 shares of FG for every 1000 shares of FNF held.  The Form 8937 asserts a fair market value of the FG shares of $19.2565 per share on the date of the spinoff is most appropriate.  

Example: 
Owned 200 shares of FNF 
Received (due to receive) 0.068 * 200 = 13.6 shares of  FG
Value of received shares = $19.2565 * 13.6 = $261.89

Quicken actions
Div from FNF $261.89
Buy 13.6 shares of FG for $261.89
Sell 0.6 shares of FG for whatever cash-in-lieu amount received.  

I consider it likely but not absolute that FNF will be using the $19.2565 / share value in preparing the 1099-DIV forms.

(Caveat:  I am not a tax pro, CPA, enrolled agent or in any fashion qualified to offer tax advice, nor have I played one on TV.  Do your own due diligence.)  

Jean B

Thanks so much for your quick response. I figured that's what I needed to do but the instructions in the Quicken Online Help were so completely wrong that I thought I might have missed a new feature and was doing it wrong.
Thanks again.

q_lurker

i should have addressed that in my response but I jumped in before comprehending all you wrote. Yes, the instructions are a) old, b) never were correct, and c) are incorrect now. 

Taxable spin-offs are relatively infrequent, so I have not badgered Quicken Inc about the deficiency. Will do that now. 

I did need to confirm as best I could that the Div action was appropriate. Seems to be. I am not positive it always is. Even the 8937 is a bit vague, so comparing with the 2022 1099-DIV is still a good step. 

Jean B

Thanks again. I do hope Quicken fixes their Online Help.

I looked at the 8937 and thought the same. Will compare it with the 2022 1099-DIV when it finally comes out.

Thank you and have an awesome day!!!