how should I record a partial tender of JNJ shares in exchange for KVUE?
As a JNJ shareholder, I have the option to tender any or all of my shares of JNJ and receive shares of KVUE in return (see terms of the offer below). I am required to inform my broker by 14 aug how many shares of JNJ I wish to tender. JNJ will finalize the exchange rate on 18 aug. If I do choose to tender JNJ shares, I will see my share count of JNJ decrease and new shares of KVUE will appear equal to the final exchange rate published on 18 aug.
Quicken question: If for example I am holding 500 shs JNJ, and I choose to tender 100 of them, and assuming for the sake of argument that the JNJ-KVUE exchange rate is 1:7, how should I record in Quicken this partial spin-off?
The 'Corporate Spin-Off' transaction type is not relevant here, since it acts on the entire position.
What I plan to do (given hypothetical assumptions above):
- Before: 500 shs JNJ, zero shs KVUE
- Record a sale of 100 shs JNJ at cost [this is a non-taxable transaction per the offering document]
- Buy 700 shs KVUE with the proceeds
- After: 400 shs JNJ, 700 shs KVUE
- - - - -
Here are the terms of the offer:
Here is a calculator showing the daily exchange rate as we roll up to the tender deadline:
https://www.envisionreports.com/jnjseparation/2023/JNJSeparationaug07/index.html
Best Answers
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You might be eligible for a fractional share, depending on the circumstances, so the initial entry for the KVUE stock should include that fractional share, later sold (at a gain or loss) using the cash in lieu as the proceeds of the sale.
Since your holding period also carries over to the KVUE shares I'd probably do an Added action for that stock instead of the Bought action, just to get the holding period correctly stated. To get rid of cash from your "sale" of JNJ you could do an XOut action for that cash, using the SAME brokerage Account in which you're making that entry as the "to" Account. That will "magically" remove that cash without changing any other Account or Category in your file.
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I wholly agree with your thinking and Tom’s thinking on this.
I do tend to shy away from the transactions that reference back to the same account (Tom’s XOut reference). As such I’d lean toward:
- Sell JNJ 100 shares
- Buy KVUE 700+ shares
- Remove KVUE shares
- Add KVUE shares (to get the acquisition date right)
- Sell fractional KVUE shares for cash-in-lieu
If you are comfortable with the self-referencing account transaction, you might:
- SoldX JNJ referencing same account
- Add KVUE with right acquisition date
- Sell fractional KVUE
My hesitation on the self-referencing accounts is simply that such transactions make cash appear and disappear without a trace. They are useful for special cases like opening balances, but overall I try to avoid them. That said, my Remove Shares / Add Shares pairing is not really any different or less magical.
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Answers
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You might be eligible for a fractional share, depending on the circumstances, so the initial entry for the KVUE stock should include that fractional share, later sold (at a gain or loss) using the cash in lieu as the proceeds of the sale.
Since your holding period also carries over to the KVUE shares I'd probably do an Added action for that stock instead of the Bought action, just to get the holding period correctly stated. To get rid of cash from your "sale" of JNJ you could do an XOut action for that cash, using the SAME brokerage Account in which you're making that entry as the "to" Account. That will "magically" remove that cash without changing any other Account or Category in your file.
1 -
I wholly agree with your thinking and Tom’s thinking on this.
I do tend to shy away from the transactions that reference back to the same account (Tom’s XOut reference). As such I’d lean toward:
- Sell JNJ 100 shares
- Buy KVUE 700+ shares
- Remove KVUE shares
- Add KVUE shares (to get the acquisition date right)
- Sell fractional KVUE shares for cash-in-lieu
If you are comfortable with the self-referencing account transaction, you might:
- SoldX JNJ referencing same account
- Add KVUE with right acquisition date
- Sell fractional KVUE
My hesitation on the self-referencing accounts is simply that such transactions make cash appear and disappear without a trace. They are useful for special cases like opening balances, but overall I try to avoid them. That said, my Remove Shares / Add Shares pairing is not really any different or less magical.
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Thanks for the helpful comments. I hadn't considered the need to propagate the original JNJ acquisition date to the KVUE shares. Good catch.
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I didn't participate in the offer, but I received this notice in my Quicken download (Wells Fargo Advisors) today.
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If you didn't tender shares then this screen is irrelevant to you so simply dismiss it and do nothing.
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Be aware, if you simply dismiss it, you may or may not get continued reminders with each quotes download. If you do, you may want to accept it since it is simply a 1:1 offer.
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I understand Q_Lurkers solution. Mine is complicated by having purchased DRIPed shares of JNJ every quarter over the past 13 years. That's a lot of transactions. Guess I'll take an average value in Quicken and let my broker (E*Trade) and TurboTax worry about reporting the minute details if and when I sell.
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I see no need to "take an average value" (which is only allowed for mutual funds, not stocks) if you've got everything correctly stated right now. Even if you accept the 1 for 1 split, the end result should be exactly the same as your current holdings detail. The only difference is you'll have a boatload of transactions, resulting in no change.
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Hi all, I did tender shares of JNJ for KVUE. The as of date is 8/19. My approach was to do the following:
- Tendered 1000 JNJ
- Accepted 237.452 shares of JNJ (Exchange was oversubscribed)
- Received 8.0324 shares of KVUE for each accepted share of JNJ (1,907.309 new shares of KVUE)
- Removed 237.452 shares of JNJ
- Added 1,907.309 shares of KVUE
Now here is my question. Why is my removal showing a value of $39,447.60 and adding KVUE showing an investment amount of $38,295.80 a difference of $1,151.80? I used LIFO which is my standard order entry when selling and believe my brokerage firm would have done the same. I know this number is not correct because this was a tax-free exchange.
Should I have used Corp Sec Spin-Off?
(Side note: handling this type of transactions were a lot easier when you could just enter the spin-off ratios.)
Thanking you all in advance for your comments.
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"Should I have used Corp Sec Spin-Off?"
No, a spin off is an entirely different animal.
The only Actions you used here was a Remove Action for 237.452 shares and you selected lots on a FIFO basis, then you used Added Actions -however many were needed to come to 1,907.309 shares - entering the prices per share and dates of acquisition?
If that's an accurate statement then it seems the difference has to come down to some error in one or more of the Added Actions.
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Now here is my question. Why is my removal showing a value of $39,447.60 and adding KVUE showing an investment amount of $38,295.80 a difference of $1,151.80?
You do not indicate where you are seeing these values. My guess is the Investment Performance Report. For that report and the associated Average Annual Return calculation, Quicken values the removed shares and the added shares as number of shares times closing price on that date. I suspect that explains the $1,151.80 difference in values.
That approach is one reason I would have chosen to sell the 237.452 JNJ shares at cost (no cap gains generated) and then buy the 1907.309 KVUE shares for that same cost. Those two transactions will be ignored at the account level (with cash included) or will otherwise create equal and opposite effects in the Investment Performance Report. From there, my step of removing the 1907.309 shares and adding them back in to correct the acquisition date(s) would also generate equal and opposite effects in the Investment Performance Report considering the shares time closing value consideration I mentioned.
The transaction register could look like:
With the related IPR looking like:
Obviously, if more lots are involved, there is some more complexity.
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