3M Spinoff of SOLV
On 4/1/2024, before market open, I received 1 share of SOLV for every 4 shares of 3M. What prices do I enter in the "closing price of old shares" and "closing price of new shares" boxes. For each is it the closing price on 4/1? That part is never clear to me.
Thank you,
Comments
-
The prices you enter in these boxes are used in the mathematical calculation of how the basis in 3M Co will be split between the new SOLV company and the original 3M Co shares. IRS rules broadly tell you to use each stock's "fair market value" immediately after the spin-off, but don't really define how those fair market values should be determined. You have a lot of discretion here as to what stock prices you'll use - first trade of the day after spin-off, closing prices, an average of all trades during the day, maybe something else - but these days one or the other of the two stocks should be issuing a Form 8937 at some point with their recommendations as to the prices to use. So you might want to wait until this document is issued to enter those prices.
Since there are no hard and fast rules as to what prices to use to make the split of basis calculation you might find that the broker that holds these stocks use their own judgement and don't use the Form 8937 suggested prices. If you want to have your stock bases match the broker's numbers you might want to look at their site to determine (reverse engineer) what number they used here.
0 -
A stock split also just happened with GE so there are additional places to review the methodology. As mentioned above, a broker might use something other than the 8937 prices. These are the standard closing prices found in multiple places. The closing price for 3M old shares (92.84) and SOLV new shares (66.90) for 2 April. Also, remember to backup your data before doing this change.
0 -
Form 8937 for the 4/1/2024 3M spin-off to Solventum is available.
1 -
Here is Form 8937
0 -
Thus I used 94.02 for the field 'Cost per old share" and 69.10 for the field 'Cost per new share'
I ended up being off 16 cents and 15 cents so I just went in and changed the figures to match Schwab. Hopefully that is ok. (The 1 cent difference is probably due to the fact that I had & have a 1 cent higher cost basis than Schwab when I started. I can live with a 1 cent difference.)
0