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Hpe spinoff realized gain

Can 1099-B be correct showing a spin-off from HPE to Seattle Spin Co of 2,123 shares with a proceeds of about $8500 and a cost basis of only $12.77 with a realized gain of nearly the same $8500 since at the end of the transaction I seem to have had no more in my brokerage account than I started with?

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Level 10

Hpe spinoff realized gain

Here is how it should have worked....  We can't see your return so all I can do is show you all the rules.  You'e above sounds like they are missing original cost basis and the transaction should be reported differently.

In 2015 Split of HPQ and HPE  47.15% basis to HPQ and 52.85% basis to HPE http://h30261.www3.hp.com/faq/separation-faqs.aspx

I just went through all the HPE spin offs for 2017

You can not have losses, they just reduce cost basis.  A few Cash in Lieu (CIL) and  a Seattle Co sale that yes you can have a large gain on that you do report, you then increase your basis in the new company Micro Focus by the basis you had allocated to Seattle Class A plus the gain recognized.

Took me a while to figure it all out. Here are links to HPE basis allocations.

There were 2 spinoffs/reorganizations from HPE this year.

1. was 3/31 Everett distribution, merged to CSC, and CSC is surviving company: HPE 75.1% of basis, Everett 24.9% and you got .085904 shares of Everett for every HPE.  You may have CIL, Ultimately Everett named DXC Technologies.


2. 9/1 distribution Seattle Class A, Micro Focus.  HPE basis 77.92%, Seattle Co 22.08% got 1 for 1 and Seattle co gets sold recognize a gain, no losses.  Allocate the Seattle Co basis plus the gain (plus the loss) to ultimate shares of MicroFocus .13732611 Micro Focus ADS for every Seattle co. 


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