For the GE Vernova spin-off cost basis, allocate 79.74% of your original GE cost basis to GE Aerospace and 20.26% to GE Vernova. The distribution on April 2, 2024, was tax-free under Internal Revenue Code Section 355, so you owed nothing when you received the new shares.1Office of the Law Revision Counsel. 26 U.S. Code 355 – Distribution of Stock and Securities of a Controlled Corporation The tax work shows up later, when you sell: the split you record now determines the gain or loss on every future sale of either stock.
Where the 79.74/20.26 Split Comes From
IRC Section 358 requires that your total basis in the original stock be divided between the shares you kept and the shares you received, based on the relative fair market values of the two stocks immediately after the distribution.2Office of the Law Revision Counsel. 26 USC 358 – Basis to Distributees GE filed IRS Form 8937 with the specific percentages, calculated from the April 2, 2024 closing prices of $140.53 for GE Aerospace and $142.85 for GE Vernova:
- GE Aerospace: 79.74% of your original GE cost basis
- GE Vernova: 20.26% of your original GE cost basis
These percentages apply to every shareholder, regardless of when the original GE shares were purchased.3GE Aerospace. Attachment to Form 8937 – GE Vernova Distribution
A Worked Example
Say you owned 1,200 shares of GE with a total cost basis of $12,000 the day before the spin-off. The 1-for-4 distribution gave you 1,200 shares of GE Aerospace and 300 shares of GE Vernova. Your basis splits like this:
- GE Aerospace: $12,000 × 79.74% = $9,568.41, or roughly $7.97 per share
- GE Vernova: $12,000 × 20.26% = $2,431.59, or roughly $8.11 per share
The combined basis still totals $12,000. The allocation moves the numbers around; it doesn’t create or destroy any.3GE Aerospace. Attachment to Form 8937 – GE Vernova Distribution
Do Each Purchase Lot Separately
If you bought GE at different times and prices, run the calculation once for each lot. A block of 400 shares purchased in 2015 at $25 does not share a basis with 800 shares bought in 2020 at $10. Apply the 79.74%/20.26% split to each lot on its own. Each lot also keeps its own holding period, which decides whether an eventual gain is taxed at long-term or short-term rates.
If You Also Held Through the GE HealthCare Spin-Off
The Vernova distribution was the second leg of GE’s three-way breakup. On January 3, 2023, GE distributed GE HealthCare Technologies shares at a ratio of one GEHC share for every three GE shares held.4General Electric. Attachment to Form 8937 – GE HealthCare Distribution That distribution was also tax-free under Section 355 and had its own allocation:
- GE (after the HealthCare spin-off): 79.13% of the pre-distribution GE basis
- GE HealthCare: 20.87% of the pre-distribution GE basis
The two allocations run in order. Apply the HealthCare split to your original basis first, then use the reduced GE figure as the starting point for the Vernova split. Skipping the first step inflates your GE Aerospace basis, shrinks your GE HealthCare basis, and distorts the gain or loss on every future sale of all three stocks.4General Electric. Attachment to Form 8937 – GE HealthCare Distribution
Sequential Example
Start with a $10,000 original GE basis. After the January 2023 HealthCare spin-off:
- GE basis: $10,000 × 79.13% = $7,913
- GE HealthCare basis: $10,000 × 20.87% = $2,087
Then, after the April 2024 Vernova spin-off, you split the $7,913, not the original $10,000:
- GE Aerospace basis: $7,913 × 79.74% = $6,310.90
- GE Vernova basis: $7,913 × 20.26% = $1,602.97
The original $10,000 now sits in three places: $6,310.90 in GE Aerospace, $1,602.97 in GE Vernova, and $2,087 in GE HealthCare. Most errors come from forgetting the HealthCare step and running the Vernova percentages against the full original basis.
The 2021 Reverse Split
If you owned GE before August 2, 2021, factor in the 1-for-8 reverse stock split executed on July 30, 2021.5General Electric. GE Reverse Stock Split Frequently Asked Questions The reverse split didn’t change your total basis, but it multiplied your per-share basis by eight. Eight hundred shares at $10 each became 100 shares at $80 each. Adjust for this before applying either spin-off allocation.
The Cash for Fractional Shares
The 1-for-4 ratio left many shareholders entitled to a fraction of a GE Vernova share. The transfer agent didn’t issue fractions. It pooled them, sold them on the market, and sent each shareholder cash for their slice.
That cash is a taxable capital gain or loss. Allocate a proportionate piece of your GE Vernova basis to the fractional share. If your full Vernova allocation was $2,431.59 for 300.25 shares, the 0.25 fractional share carries a basis of about $2.03. Subtract that from the cash you received and report the difference on Schedule D and Form 8949 for the year the cash was paid.
Your Holding Period Carries Over
Under IRC Section 1223, stock received in a Section 355 distribution inherits the holding period of the original shares.6Office of the Law Revision Counsel. 26 USC 1223 – Holding Period of Property If you bought GE in 2018, your GE Vernova shares are treated as acquired in 2018. A sale in 2026 qualifies for long-term capital gains rates, which run well below short-term rates for most taxpayers. The same carryover applies to any GE HealthCare shares you received in 2023.
Check What Your Broker Recorded
Brokers report cost basis on Form 1099-B, and spin-offs are a common failure point for their automated systems. Typical mistakes include the wrong allocation percentages, ignoring the earlier HealthCare spin-off entirely, or listing the new GE Vernova shares with a zero basis, which would overstate your gain badly when you sell.
Pull up your account and confirm that the recorded basis for GE Aerospace and GE Vernova reflects the 79.74%/20.26% split against your pre-distribution GE basis (and, if applicable, the sequential HealthCare calculation before it).3GE Aerospace. Attachment to Form 8937 – GE Vernova Distribution If the figures are wrong, most brokers accept a cost basis correction request. Fix it before selling. Once you sell, correcting a bad 1099-B requires an override on Form 8949, which tends to draw IRS attention.
What a Basis Error Can Cost You
If an incorrect basis leads you to underreport a capital gain, the IRS can assess an accuracy-related penalty of 20% of the resulting underpayment.7Internal Revenue Service. Accuracy-Related Penalty For individuals, the penalty attaches when the understatement exceeds the greater of 10% of the tax that should have been reported or $5,000. That’s on top of the additional tax and interest. Both GE Aerospace and GE Vernova have appreciated since the spin-off, so even a small basis error can translate into a real tax difference when the shares are eventually sold.