NOTES:

1. The cost basis allocations for the spinoffs are dependent on the prices used for United Technologies, Carrier Global and Otis Worldwide in the cost basis calculations for a spinoff. 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.
2. In their SEC filings the companies note that Raytheon Company may pay a special dividend before the merger transaction. It is possible the IRS will interpret this dividend as part of the merger consideration. If this occurs, the merger for RTN shareholders, as per these instructions, would need to be deleted and re-entered as a merger with cash. If this occurs, when we are aware of this change, new instructions for that part of the merger will be provided.

 

History: United Technologies spun off 2 companies, Carrier Global (CARR) and Otis Worldwide (OTIS) before merging with Raytheon. Immediately after the merger UTX changed its name to Raytheon Technologies Corp and ticker symbol to RTX.

The cost basis allocation information is from IRS form 8937. A link to this form can be found on the Raytheon Technologies web site at:
https://investors.rtx.com/static-files/2d479c0a-d3a6-4088-b53e-94903db21198
In their example, RTX used the average of the high and low prices on April 3, 2020 to calculate the cost basis allocation.

In the merger transaction, United Technologies shareholders received 1 share of the new RTX shares for each UTX share owned. Raytheon Company shareholders received 2.3348 RTX shares for each RTN share owned. The SEC document for the merger can be found at the RTX website at https://investors.rtx.com/node/22931/html#TOC

 

 

 

General Steps:

In the steps below, we use several dates, which may not align exactly with those used by your broker. THIS IS OK. None of the transactions rely on the accounting system checking prices for a specifc closing date. What is important, is that each transaction be separate from each other transaction by one day, and that they be done in the order specified. If you don't need all of the transactions, or if the broker used a different date for one of them, this is OK. Again, the important thing is to enter these transactions in the order shown in the steps, and that each entry be dated at least one day apart from each other entry.

The entries for this reorganization involves up to 2 standard spinoff and merger entries, depending on which companies your club held at the time of the transaction.

 

If your club held ONLY Raytheon prior to the merger, skip the Spinoff Entries, and enter ONLY the Merger for Raytheon (RTN) shareholders.

If your club held ONLY UTX prior to the merger, start with the Spinoff Entries, and then enter ONLY the Merger for United Technologies (UTX) shareholders.

If your club held UTX and RTN, enter the UTX spinoffs, and then enter BOTH Merger transactions, one for each shareholder type. Make sure to keep each transaction on a separate date.

 

The Spinoff Entries

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 First spinoff. Please enter them in the order they appear in the instructions. This is important to get the cost basis allocations correct. Both spinoff entries are for UTX shareholders only.

 

Date: 4/3/2020

Select Parent Security (or Parent Company) : United Technologies (UTX)

Remaining Basis Percentage: 73.86

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

Spinoff  Security (or Symbol of New Company) : Otis Worldwide  (OTIS)

 Shares received : 0.5 x (# of UTX  shares owned)   (Remember to include fractional shares.)

For example, if you owned 100 UTX shares, you should receive 0.5 x 100 = 50 OTIS shares.

Price Per Share : 47.32  (Average of high and low price on 4/3/2020)                                          

Save the transaction and this spinoff has been entered.

 

Here is the information you need to complete the Second spinoff. Please enter them in the order they appear in the instructions. This is important to get the cost basis allocations correct.

 

Date: 4/4/2020

Select Parent Security (or Parent Company) : United Technologies (UTX)

Remaining Basis Percentage: 74.70

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

Spinoff  Security (or Symbol of New Company) : Carrier Global  (CARR)

 Shares received : 1.0 x (# of UTX  shares owned)   (Remember to include fractional shares.)

For example, if you owned 100 UTX shares, you should receive 1.0 x 100 = 100 CARR shares.

Price Per Share : 16.92  (Average of high and low price on 4/3/2020)                                          

Save the transaction and this spinoff has been entered.

 

 

The Merger Entries

Go to Transactions > Merger or Accounting > Securities > Record merger of securities depending on the version of the software being used. If you are unfamiliar with merger transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_merger

 

Here is the information needed for United Technologies (UTX) shareholders to complete the merger.

Date: 4/5/2020

Old Security or Merging Company: United Technologies (UTX)

Price per share of old Security / UTX:  49.93, if needed

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

New Security: Raytheon Technologies (RTX)

New Security Price: 49.93   (Average of closing and opening prices on 4/3/2020)

Shares received : 1.0 x (#of UTX shares owned).

            (Remember to include fractional shares.)

 For example, if you owned 100 UTX shares, you should receive 1.0 x 100 = 100 RTX shares.

Save the transaction and this merger has been entered.

 

 

Here is the information needed for Raytheon (RTN) shareholders to complete the merger.

Date: 4/6/2020

Old Security or Merging Company: Raytheon Company (RTN)

Price per share of old Security / RTN:  last valuation price, if needed

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

New Security: Raytheon Technologies (RTX)

New Security Price: 49.93   (Average of closing and opening prices on 4/3/2020)

Shares received : 2.3348 x (#of RTX shares owned).

            (Remember to include fractional shares.)

 For example, if you owned 100 RTN shares, you should receive 2.3348 x 100 = 233.48 RTX shares.

Save the transaction and this merger has been entered.