How to Record the Veralto Corp spinoff from Danaher Corporation

GolferChuck

How to Record the Veralto Corp spinoff from Danaher Corporation

GolferChuck

The distribution was 1 share of Veralto for each 3 shares of Danaher, the "when issued" price for Veralto was $84.56 and the price of Danaher was $248.10.

lagunajim

I just did an "Add Shares" for the shares - is there a more sophisticated way to book it?

Tom Young

@lagunajim

Since in a spin-off part of your basis in the "Parent" company stock is moved to the "Child" company stock a simple "Add" action won't accomplish that. Even if as part of your Add you do assign basis to the Child stock, you haven't reduced the basis of the Parent company stock, the "other side" of the required adjustment. And the holding period carries over to the Child stock, too.

Us the Quicken "Corporate Securities Spin-off" action to properly record the spin-off. That will put you in the correct accounting position, carrying both stocks at their proper basis and their proper holding period.

While you're free to use your own estimates of each stock's price immediately after the spin-off (these amounts are used by Quicken in calculating the basis split) you might want to wait until a Form 8937 is issued by one or the other of these companies as to their opinion as to what are the "correct" prices to use here.

lagunajim

How do you get "1 for 3" into the "Corporate Securities Spin-off Action" ?

rcflyer

Yes, how do you enter a 1 for 3 spin-off? Quicken's transaction screen shows "New shares issued: |_______| per old share"

Confusing.

q_lurker

Enter 0.333333 for the new shares per old

lagunajim

Clever!

GolferChuck

I used the spin off function, and it came out very close to the number of shares I was supposed to get. When I get the cash payout for the partial shares, Ill "sell" them in Quicken to get rid of the partial shares

crowjim46

How do I record a corporate spin off? Danaher 200 SH costs $45,946 spins off Veralto 66 Shares costs $5,304 The stock spin off ratio is 1 for 3.

[Merged Post]

q_lurker

Danaher has posted the Form 8937 here:

https://investors.danaher.com/IMAGE/Veralto+Cost+Basis+Allocation.pdf

That form suggests the fair market values applicable to the transaction could be $215.31 for DHR and $85.26 for VLTO. Those values lead to 11.660% of the pre-spinoff basis in DHR being transferred to the VTLO shares. Note that neither you nor your broker are required to use those values. Using those values, your Corporate Spinoff form would look something like this:

Beyond that, for now, I will refer readers to my post with "excruciating detail" on the GE GEHC spinoff which is very similar.

https://community.quicken.com/discussion/comment/20330433#Comment_20330433

hrazzz4h

Unfortunately I downloaded transactions from my brokerage first so the Corporate Securities spin-off gives an error message that "Security Name already in use, please enter a new name." Therefore, I can't use the proper method.

I was able to manually add the new Veralto transactions correctly multiple times due to multiple DHR purchases but that doesn't change the cost basis of my DHR purchases correctly.

Quicken has had this problem unresolved for many years but for some reason ignores it. There are questions in this forum in 2018 with the same issue and probably before.

q_lurker

1: To overcome the "Security Name already in use, please enter a new name." issue, you can either:

• Spinoff as a different company (Veralto-2) and then edit the transactions as might be preferred, OR
• Delete the downloaded transactions and then delete the security, then do the canned Spinoff action.

2: To correct the DHR cost basis from where you are now, you can:

• Use a RtrnCapX transaction with the Amount equal to the total cost basis that now applies to the Veralto shares and a Market Value equal to the market value of the Veralto shares at the close on the spinoff date. This will not get the cost basis correct on a lot-by-lot basis, if that is important to you. OR
• You can use a Shares Transferred between Accounts action to Remove the DHR shares from that account and Add them back in to the same Account. From there, you would need to edit the basis of each lot (each Add Shares transaction).

jjrichards

Q Lurker

Thank you for your guidance on the Stock spin off . After adding the transaction you suggested , I have .499988 to many shares . I did receive cash in lieu of the shares. To get the shares to balance would you suggest I just use the "remove shares transaction " , or sell the shares ? If I sell the shares what price would you suggest ?

Thank you

Jeff

q_lurker

@jjrichards You should sell the fractional shares for the total cash-in-lieu (CIL) amount you received, probably a few days after the spin-off. Let Quicken calculate the price per share.

MJB

Windows 10 Quicken version R52.33

Investment Accounts held at Charles Schwab

Stock Symbols involved:

Danaher (DHR)

Veralto (VLTO)

using the Enter Transaction "Corporate Security Spin-off" causes multiple entries in each of 5 accounts (Individual and Retirement accounts) that don't match Schwab (incorrect # of shares / cost basis).

I deleted all of the "Spin-off" transactions and made the following manual entries in each account:

1. Removed existing Danaher shares on October 2, 2023
2. Added (spin-off) Veralto shares with cost basis supplied by Schwab on October 2, 2023
3. Re-Added Danaher shares with adjusted cost basis October 2, 2023

My questions:

1. Are my manual entries Correct?
2. Am I losing anything from a "Reporting" standpoint? (Performance, Capital Gain/Loss)

If my steps are incorrect, I welcome your instructions on how to use the Quicken "Corporate Security Spin-off"

Thanks,

MJB

mshiggins

[Removed- No Longer Relevant]

q_lurker

@MJB There are a variety of ways that your Quicken spinoff action could have varied from the Schwab process.

Your Remove / Add / Add process should be fine, overall. The only aspect that process might miss is if there was a fractional share consideration whereby you received cash-in-lieu rather than the fractional share you were due. Rigorously speaking, those should be handled as shares received (added) with a cost basis and then sold for the cash-in-lieu amount.

The other point to make sure you got right with the Adds of both Danaher and Veralto is that the Acquisition dates were properly associated with the added shares.

In terms of possible reporting issues, spinoffs can always be tricky to process and interpret. A drawback to the Remove / Add / Add is that the "Amount Invested" for Danaher in particular is likely misleadingly inflated. That can then throw of other calculations like ROI%. For the Investment Performance Report (and related Average Annual Return values), you might see better (more accurate) numbers by Removing on October 1 and Adding on October 2. (That is something I am continuing to investigate.)

MJB

1. I did receive "Cash-in-lieu" deposits to some of my accounts. You told me that these should be handled as shares received (added) with a cost basis and then sold for the Cash-in-lieu amount. How do I determine the cost basis?

2. Regarding the Acquisition Dates, I used original dates when Danaher stock was 1st bought.

3. You wondered if the Removing date should be October 1 and Adding date of October 2. And final thoughts on this?

Thanks,

MJB

q_lurker

1. One way t determine the cost basis would be to look at the cost basis of the Danaher shares just before the spinoff comparing to the total of the Danaher and Veralto shares cost basis. If Schwab did everything right on their side, the difference should be the cost basis associated with the fractional shares sold for the cash in lieu. Noting that the share ratio was 1 Veralto for 3 Danaher, you should be able to determine the size of the fractional share; likely 1/3 or 2/3 of a share. Naturally, that is addressed one account at a time.
2. Using the Danaher acquisition dates is correct. If within an account you bought shares at different times, you would want to track that as well (to be fully accurate).
3. Dates — The reason I would consider different dates is the Investment Performance Report and related Average Annual Return presentations in Portfolio views. With Remove Danaher / Add Danaher / Add Veralto all dated the same date (October 2), that report will remove and add the Danaher shares at the same value; those become a wash for the report. The remaining added Veralto become a net addition to the calculation which would create an error. By dating the Remove Danaher a day before. you remove the Danaher shares at their pre-spinoff value, then the next day add the Danaher and Veralto shares back in at what should be a similar total value. It will not be an exact wash as should apply, but it is likely closer. Individual cases will vary as does the importance of the report and other related Average Annual Return presentations in Portfolio views.

Hope this helps

theputnams

Seems like everytime I encounter one of these stock-for-stock spinoffs, the part that is handled "least gracefully" by Quicken are the cash-in-lieu amounts.

Would be a great product enhancement to accommodate this, perhaps by asking for the number of received shares (not just the calculated # based on 'x' for 'y') and calculating/pre-filling a cash deposit for the difference as a cash-in-lieu amount.

Just a thought..