Honeywell spun off Resideo effective October 29, 2018 in a transaction meant to be tax-free to its shareholders. Resideo began normal trading on the NYSE on Monday, October 29, 2018.

The cost basis allocation information is from IRS form 8937. A link to this form can be found on the Honeywell web site at:  https://www.snl.com/Cache/1500114312.PDF?O=PDF&T=&Y=&D=&FID=1500114312&iid=4121346 .

Resolution:

This action is a standard 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.

Date: 10/29/2018

Select Parent Security (or Parent Company) : Honeywell (HON)

Remaining Basis Percentage: 97.0816

Cash received:  See your broker statement for cash-in-lieu received

Spinoff  Security (or Symbol of New Company) : Resideo (REZI)

 Shares received : 0.16667 x (# of HON  shares owned)   (Remember to include fractional shares.)

For example, if you owned 100 HON shares, you should receive 0.16667 x 100 = 16.667 REZI shares.

Price Per Share : 25.80  (Volume weighted average price of REZI on 10/29/2018)                      

Save the transaction and the spinoff has been entered.

NOTE:

The cost basis allocation is dependent on the prices used for both Honeywell and Resideo 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.