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how to handle - GE spin off of GEV (edit)

stgd

Many people are gonna need a how to refresher on this subject, step by step. This is a non taxable spin off according to GE and GE holders will recieve 1 share of Vernova for every 4 shares of GE held. Not sure about unit pricing at the moment of spin off. It may come later . The corporate spin off transaction in Quicken has a field called "new shares issued per old share". Is this a percentage like 25% or .25 or what?. Also what about using the add and remove shares procedures.

Expert help needed . Thanks

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shelquis

@ https://community.quicken.com/profile/mshiggins Well, it's beginning to look like it. Like you and https://community.quicken.com/profile/Pacificagurl , I'm also going through this for the first time since being migrated from TDA to Schwab. I haven't found anything I like about Schwab compared with TDA.

Pacificagurl

@shelquis wanted to update as I just finished talking with Schwab corporate actions dept re GEV. He indicated that we should see the cost basis updated on the spin-off shares later this week.

shelquis

@ https://community.quicken.com/profile/Pacificagurl Thanks. That's really good news. I've already run the Corporate spinoff transaction, so it'll be interesting to see how Schwab and Q cost bases compare. It would be nice if Schwab provided that kind of information to each affected account in a timely manner though. Que sera, sera.

stgd

I wanted to let the community know that I used the Q Corp spin off Transaction ( as described by alancgut above and it seems to have worked. But the cost basis is off quite a bit compared to what Fidelity has posted on my account website. Schwab hasnt posted any cost basis data. I will contact the brokerages at the appropriate time to have them review their cost bASES. Mean time its difficult to have confidence in anybodys data. I could change Q to agree with the Brokerages, but i dont have a lot of Confidence in Brokerages data either. Dont know what to do at this time

q_lurker

@stgd Quicken's results based on the GE 136.47 & GEV 140.00 share prices should be 79.59% of the basis retained and 20.41% of the basis passed on to GEV. (Those percentages are of the total cost basis of the entire holding or the cost basis of any one lot. They are not basis per share percentages.) Even changing those two specific values to similar but different, such as to opening values rather than closing would still yield something like that "80/20" split. Using the opening values of GE 140.53 and GEV 142.85 yields a 79.74/20.26 split. The entire key to getting to the split percentages is in choosing what values to use as the Fair Market Values of the two securities immediately after the deal is done.

You are saying Quicken's values are "quite a bit off" from Fidelity's values. Are you saying Fidelity's numbers are significantly different that "80/20" split?

My first level purpose in using Quicken for this sort of process is to double-check the brokerage data. If Fidelity is getting even a 78/22 split, that is different enough that asking why is reasonable.

Once I am convinced the brokerage is doing something reasonable, then I try to get my Quicken data to match the brokerage. I can change my stuff easier than I can get them to change theirs.

Further note: There is no requirement that Fidelity and Schwab choose the same path in determining fair market value.

So much of this discussion reflects why the general recommendation of waiting for the Form 8937 release is common. That form will usually suggest specific fair market values as reasonable possibilities. But even that publication is not mandatory on the financial institutions.

Jonathanas

@Pacificagurl @shelquis I too am a Schwab adoptee; formerly TDA mulitple account holder. In a chat today, the rep said that Schwab is still working on the GEV/GE spinoff accounting. The cost basis for each will be updated when they're done. So we just need to be a bit more patient, I guess.

Off topic: The other issue I've noticed on the Schwab site is that their Portfolio Performance pages only show performance since the transition (for me, November) Cost v. value set equal then; not my TDA cost! SO that whole series of pages/tabs is useless for any kind of historic metrics! (it is interesting if I keep in mind it's only since Nov 2023.) sigh… SO much room for improvement! … Now back to your regularly scheduled support site! ;-)

-Jonathan

shelquis

Thanks for posting https://community.quicken.com/profile/Jonathanas

Pacificagurl

@shelquis @Jonathanas just a heads up that Schwab finally got the GEV spin-off cost basis updated.

q_lurker

@Pacificagurl Would you please share what the Schwab breakout of the GE basis was to the two ongoing companies?

Before: Basis of GE was 100%

After: Basis of GE ___% and Basis of GEV was ___%.

Pacificagurl

@q_lurker sure no problem. GE % after was 84.1652% and GEV after was 15.8348%. I used $140.19 as my opening price on GEV as that it what Schwab sold the CIL of fractional shares at. I input $186.285 as the GE price in the Corporate Securities Spin-Off transaction in Quicken. So while the number is high vs reality of the prices on the day the deal was done, doing that got my cost basis exactly the same on all lots except two that were off $0.01 each which I was able to manually correct so my records match Schwab's.

Hope that helps!

Rick Milton

I'm confused! When I begin the Corporate Spinoff, I'm fine until I get to "COST per old share" - but it then wants me to put in the closing PRICE of the old share (GE)? There is a total difference between my COST per share and the closing PRICE per share. What am I missing??

Pacificagurl

@Rick Milton it's proportioning the original cost basis across the two holdings based on the FMV % of each holding after the spinoff. What you put in the prices for the two stocks will drive the formula to allocate a percentage of the original basis to the new basis for each holding. That's why I had to put in $186.285 as the closing price for GE even though it that's not what it closed for on 4/1. Otherwise my allocated basis between the two would be way off from Schwab's. I had to back into the GE closing price figure in order to get the ratios correct between the two.

https://costbasistools.com/spinoff/calculator.php I used this calculator to initially calculate the percentages however the results were quite a bit off from Schwab's. And I decided I wanted to match them even though their ratios seemed skewed toward GE having a higher valuation than what it actually traded for on merger date. So I ended up creating a spreadsheet with formulas to determine the values to input into Quicken based on the basis split that Schwab did between the two holdings. Apparently each brokerage is free to use varying formulas and Schwab's came up with an 84.1652% / 15.8348% basis split when it really should have been closer to 80/20, for GE & GEV, respectively.

Best to start by looking at your lots for GE & GEV and what basis your brokerage gave each and figure the percentage split. (It took Schwab about 20 days to update my lots from 0 to the new basis.) Then from that you can determine the share prices to enter for each. And as I said in my earlier post, I selected $140.19 as the opening value of GEV since that was the price on the cash-in-lieu of fractional shares per the brokerage info.

q_lurker

@Rick Milton What you are missing is that the prompt for “Cost” has been poorly labeled from day one - decades ago. User’s comments finally got them to clarify that what they really needed were the fair market values which can be construed as closing prices immediately after the spin-off. But simply relying on closing prices may not produce the same cost basis allocation your financial institution determines -as @Pacificagurl explained.

@Pacificagurl - that split of the basis would be a caution flag for me. Just doesn’t look right - or even close.

Pacificagurl

@q_lurker yeah I was surprised how far off the ratio was between the two holdings! But my overall basis is right and I'm a buy and hold gurl so not sure it's worth my time to call them and question it.

Derek Marsano

Today I noticed that Schwab finally has provided cost bases for the GE and GEV lots. Over years of use, I've found that Quicken's CORPORATE SECURITIES SPIN-OFF transaction leaves a lot to be desired, so I don't use it. Here's what I did instead.

For each lot of GE:

-In Quicken, find the BUY - SHARES BOUGHT transaction and note the purchase date and number of shares.

-Enter a new REMOVE - SHARES REMOVED transaction, transaction date 4/2/2024, number of shares = all shares in the purchase lot.

-Enter a new ADD - SHARES ADDED transaction: transaction date 4/2/2024, original number of shares, total cost = cost basis from Schwab (Quicken calculates the price per share), and (IMPORTANT) date acquired = the original purchase date from your original BUY transaction.

For each lot of GEV:

-In Quicken, enter a new ADD - SHARES ADDED transaction, transaction date 4/2/2024, number of shares = shares of GE times 1/4, total cost = cost basis from Schwab (Quicken calculates the price per share), date acquired = original purchase date of corresponding lot of GE.

Note: If you received CASH IN LIEU of a fractional share of GEV, you will enter a SELL - SHARES SOLD transaction for the fraction of a share. Schwab simply reports these cash in lieu transactions as a miscellaneous credit, and if downloading Schwab transactions into Quicken, these will appear as an unspecified credit for GEV. In reality, you have sold the fractional share; in my case it was 0.5 shares at a price of $140.20. I entered a SELL - SHARES SOLD transaction for 0.5 shares at $140.20 and the total proceeds then matched the cash in lieu amount. You will need to identify which lot Schwab chose to sell from. You will probably need to do a calculation to determine the higher cost basis of that lot before the sale. In the end, each lot of GE and GEV in Quicken should match lots reported by Schwab for Open Date/Date acquired and Cost Basis/amount.

After making these entries, your cost basis and holding period for each lot of GE and GEV will match in Quicken and on the Schwab web site, and you will see accurate gain/loss figures for each lot. Good luck.

mshiggins

My Schwab percentages worked out to GE 79.2817% and GEV 20.7183%. Had to add back in the basis for the cash in lieu shares for GEV.

Has the form 8937 been published?

q_lurker

Has the form 8937 been published?

Not that I have found or seen yet.

My Schwab percentages worked out to GE 79.2817% and GEV 20.7183%. Had to add back in the basis for the cash in lieu shares for GEV.

Adding back in the basis for the ‘sold’ cash-in-lieu shares is the correct step. As that is no more than one share of GEV, I would not expect that addition to greatly alter the roughly 80/20 ratio.

The split @mshiggins identified would correspond to using prices in Quicken’s spin-off action of 133.933 (GE) and 140 (GEV).

The math — (1/4 * 140) / 0.207183 - (1/4 * 140) = 133.933.

These values are much more believable than those @Pacificagurl found.

Pacificagurl

@q_lurker I find that odd that the ratio of cost basis between the two securities would be so different for accounts at the same brokerage (Schwab in this case).

UGH I just went back and checked my Schwab account. The MFers changed the basis ratio again. It looks more like @mshiggins ratios now. Looks like I'm going to have to edit and correct all my lots to match Schwab….grrrrrrr. Frustrating that they say NOTHING about this and it's maddening. I wan't TDA back! Anyone have suggestions of a brokerage that gives more details and is more transparent than Schwab? I'm ready to try some place else if they are more like TDA was. Schwab is just sucking in so many ways in comparison. I tolerated it, but this is pushing me over the edge!

q_lurker

The Form 8937 is finally available through the FAQ for this spinoff on this site: https://www.geaerospace.com/investor-relations/shareholder-services

That form suggests one possibility of using the opening values on 4/2/24 which were GE at $140.53/share and GEV at $142.85/share. Those become (per their form) 79.74% of GE basis retained with GE shares and 20.26% of GE basis transferred to GEV spinoff shares. Rigorously, that should be done on a lot-by-lot basis.

Investors are not required to use those values but this submittal does make them defensible. Do your own due diligence and make our own choices.

mshiggins

The difference is small, but it bothers me that Schwab didn’t use the Form 8937 numbers. Maybe they have some set formula for figuring the ratio? Ameritrade always matched the Form 8937.

q_lurker

@mshiggins Waiting a month for that form may have been longer than Schwab was willing to hold off.

Can’t see a reason for the delay. The GEHC spin-off a year earlier used the same approach (opening prices) and came out 6 days after the spin-off.

If you’ve matched to the Schwab data, you’ll be fine (IMO).

tvicki

It's possible Schwab may change their figures to match Form 8937. It has happened in the past at least once. I'll check Form 8937 and Schwab shortly.

tvicki

Schwab did change their figures. I've entered it in Quicken however it didn't come out the way I expected and I don't know why. It was $80.83 or $80.84 off. (Maybe I should figure out why but it's unlikely that I will.) Thus I increased the RtrnCapX on GE and I changed the Total Cost (Cost Basis) of Shares Added on GE Vernova. Then of course I sold the fractional share of GE Vernova and it all matches Schwab. I hope this doesn't mess me up in the future. (Or maybe something like this in the past is messing me up now.) I can calculate it all long hand following Form 8937. If anyone knows why Quicken didn't handle it correctly (perhaps from their own experience on this transaction) please let me know.

q_lurker

@tvicki

If your Quicken Spinoff process generated a RtrnCapX transaction, you must have had only one lot of GE. That likely makes things easier.

Was your Quicken cost basis for that GE holding the same as Schwab's basis before this event?

Editing the RtrnCapX amount by the $80.xx should be fine, if that took the basis in Quicken down to the Schwab value. Likewise for increasing the cost shown on the Add Shares for the new GEV shares should be fine.

That Add Shares should include any fractional shares later sold for the cash-in-lieu amount. At that point (before the CIL sale), the GE before-basis should equal the sum of the GE and GEV after-basis.

The only explanation I can offer for Quicken not "handling it correctly" is that your data entry still is not matching Schwab's.

The math is really pretty straightforward. Using the for 8937 values, Quicken would calculate:

$140.53 / (140.53 + 1/4 * 142.85) = 79.737% of GE before basis stays with GE after event
1/4 * 142.85 / (140.53 + 1/4 * 142.85) = 20.2633% of GE before basis transfers to GEV after event

The form rounded those two percentages. To get the exact Form 8937 percentages of 79.74% and 20.26%, the plug in prices I would recommend would be:

GE at 140.5585
GEV at 142.85

I suppose that level of difference could amount to an $80.xx discrepancy for some size GE holding.

Hope this helps

tvicki

@q_lurker Thank you! Yes it helps.!

Yes I only have 1 lot of GE. And yes my Quicken cost basis for that GE holding was the same as Schwab's basis before this event.

I did GE at 140.53 and GEV at 142.85

I had thought that I might come out 52 cents different than Schwab (according to my long hand calculations w/more decimal places) but when it was different by $80.83 or $80.84 I just didn't know what happened.

Everything is now matching Schwab. I forgot to do a Corporate Name Change of General Electric to GE Aerospace which I'll do the next time I'm on Quicken.

mshiggins

Another irritating thing about the Schwab site vs. the Ameritrade site - it is cumbersome to get the lot details downloaded accurately from Schwab. I need the lot level detail to build the QIF import for the Add transactions.

The export from the lot details listing truncates share quantity to 3 decimal places, while the list displays 4 or even 5 decimal place share quantities. To get the non truncated share quantities, I have to “print” to PDF, then export the PDF to Excel, then clean up the Excel.

I was aiming to go through this process only once and so had waited what seemed like an appropriate amount of time after the action to go through collecting the lot details. Apparently I did not wait long enough. Should have known to wait for the Form 3987.