DTE Energy spun off DT Midstream effective July 1, 2021 in a transaction meant to be tax-free to DTE shareholders. DT Midstream began normal trading on July 1, 2021. DTE Energy shareholders received 0.50 shares of DTM for each share of DTE owned.
Resolution:
This action is a simple spinoff transaction in the accounting software. It is structured to be a non-taxable event for DTE Energy shareholders. The cost basis allocation information is calculated from the average of the hi and low prices of DTM and DTE on the effective date of the spinoff. These are the prices used in IRS form 8937 posted on the DTE website. A link to form 8937 is on the DTE website at https://ir.dteenergy.com/shareholder-services/default.aspx . Choose the Shareholder Allocation Statement link on this page.
NOTE:
The cost basis allocation is dependent on the prices used for both DTE Energy and DT Midstream in the cost basis allocation 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.
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: http://www.iclub.com/support/kb/default.asp?page=normal_spinoff
Here is the information you need to complete the spinoff.
Date: 7/1/2021
Select Parent Security (or Parent Company) : DTE Energy(DTE)
Remaining Basis Percentage: 84.60
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : DT Midstream (DTM)
Shares received : 0.50 x (# of DTE shares owned) (Remember to include fractional shares.)
For example, if you owned 100 DTE shares, you should receive 0.50 x 100 = 162.35 50DTM shares.
Price Per Share : 40.55 (Average of Hi and low price on 7/1/2021)
Save the transaction and the spinoff has been entered.