Recording Dupont Spinoff
Dupont E I De Nemour (DD) has just spun off Qnity Electronics Inc (Q). Has anyone here actually had to record this transaction in Quicken Classic (Windows) yet. I have tried entering the transaction using the spinoff option in the investment account in Quicken but it is not recording in a way that matches with the recorded transaction in my Schwab account.
I have recorded these type of transactions before so I am familiar with the process. I am actually just interested in someone replying that actually has this stock and has recorded the transaction.
Comments
-
My experience with the Qnity spin off from Dupont - the "One Step Update" transaction download shows a "Withdraw" transaction of $0.00 from Qinty. It looks like that's for cash withdrawals, not close to what it should be.
I tried to Edit the transaction to change it to a "Corporate Securities Spin-Off." The dialogue box looks like it requires closing prices for both, "Q" just started trading today (11/03) so closing prices are not available yet. A note in the Help text says the spin-off transaction will enter a "Remove Shares" for all shares of the parent company and it will enter "Add Shares" for both the parent and spin-off. The dialogue box didn't ask for the symbol of the spin-off, just the name, so I'm not sure how it can completely enter the spin-off Add?
I have the same experience with the Solstice spin-off from Honeywell on 10/30. There's one transaction downloaded for the spin-off, it's recorded as a "Withdraw" of $0.00 against Solstice.
I don't have time now, so I'll wait until I have more time to try and understand what Quicken wants to correctly enter the spin-off transactions.
0 -
As far as I can see this is simply a spin-off with DuPont shareholders receiving 1 share of Qnity for every two shares of DuPont, plus Cash in Lieu for any fractional shares of Qnity, so I don't see any problem with using the Corporate Securities Spin-Off action.
The general process is to use the spin-off "wizard", which will create a fractional share of Qnity if that's what you're entitled to, and then you "sell" the fractional share using the CIL as the "proceeds" of the sale.
The wrinkle in spin-offs is that you need to come up with a "fair market value" for each share of stock of DuPont and each share of Qnity you own immediately after the spin-off but there's no "cook book" process for determining these two numbers in the tax code, so the "correct" numbers to use are a bit ambiguous. The numbers used for each stock are used to calculate how your original basis in DuPont, pre-split, gets distributed between the two companies you now own.
At some point DuPont and/or Qnity will probably release a Form 8937 expressing their opinion(s) as to what those two values are, but your broker might very well use different numbers. If you're seeing basis numbers for DuPont and Qnity on your broker's site you should be able to "reverse engineer" the numbers used by the broker.
1 -
From what I can see so far you have to add 1 share of Qnity for every 2 shares of Dupont. You create this transaction in your investment account as a buy of Qnity using the same date that the Dupont shares were purchased. Use a purchase price of $.00 for the Qnity. In Quicken you will see a $0.00 as a Cost basis for Qnity (ie. a 100% gain for whatever the current price of Qnity might be.) Dupont's current price has dropped since the spinoff and consequently it shows a loss that is around the gain of Qnity. When I do this it matches up to Schwab. I'll be checking on it in a week or so to make sure nothing changes when comparing Quicken to Schwab.
1 -
In my opinion, a Buy of Qnity backdated to when DuPont was bought is not a good approach, especially when the basis for the Qnity gets established.
0 -
Good or not, as of today that is exactly how Schwab handled the spinoff. After all, Schwab is the reporting agent for tax documents and how they report it to the IRS is all that matters to me. I'll keep monitoring, and if they change how it is handled I will adjust accordingly.
0 -
This is exactly what I did and seems to work as intended…just need to wait and see what the CIL figure will actually be and "sell" the remaining half-share to record as necessary.
0 -
I like your suggestion of how you handled the spinoff. I had the same issue in using the Corporate Securities Spinoff (which I did not like after I used it). I used your technique with $0 cost and matches now to my Schwab entry. It's a non-taxable account so it works for me. Thank you crwalejr for your helpful resolution. Cheers
0 -
It takes a while for Schwab to do the full transaction. It could be weeks or it could be a month or more in my experience.
0 -
On the Investor Relations website for DuPont they state: "No later than December 16, 2025, DuPont will post tax cost basis information for DuPont shares following the Electronics Separation. Please keep in mind that this information may not address all aspects that are relevant to your situation. We recommend you consult with your tax advisor to apply the information to your individual circumstances." That may explain why Schwab is in the dark.
https://www.investors.dupont.com/investors/dupont-investors/DuPont-Qnity-Tax-Related-Information/default.aspx
1 -
So my "paper trail" will look like I bought Qnity on the same day I acquired Du Pont? That's confusing. I have DD in an IRA, so the tax ramifications are irrelevant for me, but this still seems like a confusing way to know what happened when. My broker indicates a Nov 3 spin off date even though stock charts indicate a 10/27 creation date for Qnity. Why are they different if DD created Qnity? So what acquisition date and what price do I use? Open? Close? High? Low? Thanks.
0 -
So my "paper trail" will look like I bought Qnity on the same day I acquired Du Pont? That's confusing."
What you're seeing here is what the tax law requires. The fiction here is that Qnity always existed "inside" DuPont and, accordingly, your holding periods for Qnity began with each purchase of DuPont stock. Mechanically in Quicken the spin off will be recorded on the date you use in the spin-off "wizard" as an Added transaction with an Acquisition Date that same as your purchase of DuPont stock, so not so confusing. (If I'm remembering correctly, early versions of Quicken actually showed the spun-off "child" stock as existing all the way back to the original purchase date of the "parent" stock. Now that was confusing.)
"My broker indicates a Nov 3 spin off date even though stock charts indicate a 10/27 creation date for Qnity. "
The Qnity stock began trading on a "when issued" basis on 10/27 even though the distribution actually occurred 11/3. So, presumably, you could use either date in your own records as you were "owed" the Qnity stock when it began trading on a "when issued" basis on 10/27.
"So what acquisition date and what price do I use? Open? Close? High? Low?"
As I explained above the IRS has never published a standard "cook book" formula for spin-offs, saying only that you split the basis of your original DuPont shares based on the "fair market value" of your holding immediately after the spin-off. DuPont or Qnity (and maybe both) should issue "No later than December 16, 2025" a Form 8937 giving their opinion of "what prices to use", but that's only an opinion, not "the law." Since you own the stock in an IRA and there's no tax consequences, use use whatever prices you want.
0 -
@Tom Young I believe @WSC was responding to the posts of @crwalejr who stated "From what I can see so far you have to add 1 share of Qnity for every 2 shares of Dupont. You create this transaction in your investment account as a buy of Qnity using the same date that the Dupont shares were purchased." (emphasis added)
As I said at the time, that is a poor approach as @WSC is describing. The Spinoff wizard will not do that and the user should not do that. It is not what the tax laws require. The tax laws do allow the spun off shares to carry forward with the acquisition dates of the parent company lots. Again, that is what the spinoff wizard does with the generated Add Shares transactions.
Dates: Per the Dupont releases, the shareholders received their Qnity shares November 1, a Saturday. The brokerage is apparently recording the change on the next business day, November 3. If it applied to me, I would use the November 1 date. Only if I were a speculative trader dealing with 'when issued' shares would I work with the October date(s).
Prices: My preference (in your case) would be to use the closing prices of November 3 for the spinoff wizard with a transaction date of November 1. I find closing price (particularly for the spinoff, Q) maintains slightly better (more accurate) Investment Performance Report and Average Annual Return values.
0 -
Thanks for everyone's help.
Maybe this is over-simplified but for those of us with DD is in an IRA, why not just add the correct number of shares as “shares in” and note it’s a spinoff of DD? I tried the wizard and it created dozens of adjustments, one for each quarterly stock dividend I've been paid since I bought DD. It was very “messy” and I don’t really need that, do I, since it’s an IRA?
0 -
What you've suggested here would work from the standpoint of getting the total market value of all securities in the Account properly stated, though it wouldn't allocate basis between the two stocks and would show the Qnity unrealized gain as the total value of the shares held. What you lose there is a lot of stock "metrics."
Using the Quicken spin-off wizard can create a lot of entries, but on the other hand "who cares?" A lot of entries on the date you use to record the spin-off can simply be ignored and completely skipped over when you're scrolling through the Transaction Register.
0 -
The DuPont website promises that, "No later than December 16, 2025, DuPont will post tax cost basis information for DuPont shares following the Electronics Separation." If you can wait, that should provide the information needed for the Corporate Spinoff wizard.
0
Categories
- All Categories
- 56 Product Ideas
- 36 Announcements
- 223 Alerts, Online Banking & Known Product Issues
- 22 Product Alerts
- 701 Welcome to the Community!
- 671 Before you Buy
- 1.2K Product Ideas
- 53.7K Quicken Classic for Windows
- 16.3K Quicken Classic for Mac
- 1K Quicken Mobile
- 813 Quicken on the Web
- 111 Quicken LifeHub