Honeywell spun off Advansix effective October 2, 2016 in a transaction meant to be tax-free to its shareholders. Advansix began normal trading on the NYSE on Monday, October 3, 2016.
The cost basis allocation information is from IRS form 8937. The form was originally post in the Investor Relations area of the Honeywell web site. In their example, Honeywell used the weighted average prices on 10/3/16 to calculate the cost basis allocation.
This action is a simple spinoff transaction in the accounting software. The information below is based on the information available from the cost basis allocation information on the Honeywell web site.
The Spinoff Entry
Go to Transactions > Spinoff or Accounting > Securities > Record spinoff of securities depending on the version of the software being used. If you are unfamiliar with spinoff transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_spinoff
Here is the information you need to complete the spinoff.
Save the transaction and the spinoff has been entered.
The cost basis allocation is dependent on the prices used for both Honeywell and Advansix in the cost basis calculations. In our experience brokers tend to use the prices found in the guidance companies post on their websites including IRS form 8937. If your broker does not use that guidance, the cost basis of the companies involved as recorded in your accounting records and in your broker’s records will not match. This is not cause for concern. This is just due to the inexact nature of the tax code in this regard. Partnership tax returns have specific areas to reconcile these usually small differences. ICLUBcentral tax printer software automatically fills in these adjustments in the normal operation of the software using the data imported from your accounting records and that you enter from your 1099.