GE’s reverse stock split took effect on August 2, 2021, at a ratio of 1-for-8: every eight shares of GE common stock were combined into one new share, the per-share price rose by roughly the same factor, and your total holding value stayed essentially the same.1GE. GE Completes One-For-Eight Reverse Stock Split The consolidation itself was not a taxable event, but the small cash payment many shareholders received for fractional shares was, and the split reset your per-share cost basis in a way that still matters today, especially after GE’s two later spin-offs.
What Happened to Your Shares on August 2, 2021
GE filed an amendment to its certificate of incorporation after the close of trading on July 30, 2021, and the stock began trading on a split-adjusted basis the following Monday.2U.S. Securities and Exchange Commission. GE Announces Effective Date for Reverse Stock Split The conversion was mechanical. Brokerage accounts updated over the weekend, and shareholders saw their share count fall and the per-share price rise when markets reopened.
A holder of 800 shares at roughly $12.95 on Friday held 100 shares priced near $102 on Monday. Same total value, fewer shares, higher sticker price. GE also reduced its authorized share count and lowered the par value of its common stock to $0.01 per share in the same filing.1GE. GE Completes One-For-Eight Reverse Stock Split
Fractional Shares and the Small Cash Payment
Eight doesn’t divide evenly into most share counts, so many shareholders had a fractional-share entitlement after the conversion. GE didn’t issue fractional shares. Instead, the fractional portion was paid out in cash at the post-split market price.2U.S. Securities and Exchange Commission. GE Announces Effective Date for Reverse Stock Split
If you held 100 shares before the split, the math produced 12.5 new shares. You kept 12 whole shares and received cash for the half share, roughly $51 at the opening price. Your broker handled the payment automatically and deposited the proceeds.
That cash payment is the one part of the reverse split that creates an immediate tax event. The IRS treats it as though you received the fractional share and sold it back, producing a capital gain or loss.3eCFR. 26 CFR 13.10 – Distribution of Money in Lieu of Fractional Shares Whether the gain is long-term or short-term depends on how long you held the shares before the split. Your broker should have issued a Form 1099-B reporting the proceeds,4Internal Revenue Service. About Form 1099-B, Proceeds from Broker and Barter Exchange Transactions and the transaction goes on Form 8949 with the result carried to Schedule D. The dollar amount is usually small; the reporting obligation isn’t optional.
Tax Treatment of the Consolidation Itself
Combining eight old shares into one new share of the same company is not taxable. Federal tax law treats an exchange of common stock for common stock in the same corporation as a nontaxable swap,5Office of the Law Revision Counsel. 26 USC 1036 – Stock for Stock of Same Corporation and the IRS confirms that stock splits, including reverse splits, do not produce income until you sell.6Internal Revenue Service. Stocks, Options, and Splits
Your total cost basis carries forward. Only the per-share number changes, and your holding period continues uninterrupted, which matters when you eventually sell and need to know whether the gain is long-term.
Recalculating Your Per-Share Basis
Divide your original total basis by your new post-split share count. If you bought 80 shares at $15, your total basis was $1,200. After the split you held 10 shares, so each share had a basis of $120. The $1,200 total is unchanged.
For any partial-share cash-out, subtract that fractional-share basis from your total before dividing across the whole shares you actually kept.
What the Later Spin-Offs Did to Your Basis
The reverse split was the first step in GE’s breakup. Two spin-offs followed, and each one required another basis allocation. If you still hold shares from before 2021, your current basis in GE Aerospace, GE HealthCare, and GE Vernova depends on all three events layered in order.
GE HealthCare, January 2023
On January 3, 2023, GE distributed one share of GE HealthCare Technologies (GEHC) for every three shares of GE held on the December 16, 2022 record date.7General Electric. GE Board of Directors Approves Separation of GE HealthCare The distribution was structured as tax-free, so no tax was due when the GEHC shares arrived, but you had to split your existing GE basis between the GE shares you kept and the new GEHC shares.
GE’s Form 8937 gave an illustrative allocation based on opening prices on January 4, 2023 ($68.41 for GE and $54.13 for GEHC): about 20.87% of your pre-distribution GE basis moved to the GEHC shares, and 79.13% stayed with GE.8General Electric. Attachment to Form 8937 – Report of Organizational Actions Affecting Basis of Securities GE noted that other methods of determining fair market value were permissible.
GE Vernova, April 2024
On April 2, 2024, GE distributed one share of GE Vernova (GEV) for every four shares of GE held on the March 19, 2024 record date,9GE Vernova. Frequently Asked Questions – GE Vernova Spin-Off and the remaining GE entity became GE Aerospace.10General Electric. GE Board of Directors Approves Spin-Off of GE Vernova This distribution was also tax-free. GE Aerospace’s Form 8937, using April 2, 2024 opening prices of $140.53 for GE and $142.85 for GEV, suggested allocating 20.26% of the then-current GE basis to the GEV shares and keeping 79.74% with GE Aerospace.11GE Aerospace. Attachment to Form 8937 – Report of Organizational Actions Affecting Basis of Securities
The Three Events Stacked Together
Take the same 80-share, $15 per share purchase from earlier: a total basis of $1,200. After the 1-for-8 reverse split, you hold 10 GE shares at $120 each.
- After the GEHC spin-off, 79.13% of the $1,200 total ($949.56) stays with your 10 GE shares (about $94.96 each). The other 20.87% ($250.44) becomes your basis in the 3.33 GEHC shares you receive (10 divided by 3), with any fractional GEHC share cashed out the same way the split fraction was.
- After the GEV spin-off, 79.74% of the then-current GE basis ($757.16) stays with your GE Aerospace shares, and 20.26% ($192.40) becomes your basis in the 2.5 GEV shares (10 divided by 4).
For any GE, GE Aerospace, GEHC, or GEV shares you sell now, the correct basis is the one that survives all three steps. Brokers generally adjusted this automatically for covered securities, but it is worth checking your reported basis against the Form 8937 percentages before you file.
If You Held GE Options at the Time
The Options Clearing Corporation adjusted GE options rather than dividing contract counts by eight. Adjusted symbols changed from GE to GE1, and each adjusted contract’s deliverable became 12 new GE shares plus a fixed cash-in-lieu amount representing 0.5 fractional shares.12MIAX Exchange. General Electric Company – Reverse Split Information Memo 48921 The 100 multiplier and the strike prices did not change. Once set, the cash-in-lieu amount was fixed and did not move with the stock. Standard GE options with normal 100-share deliverables resumed trading for new series after the adjusted contracts expired or were closed.
If You Held Physical Stock Certificates
Old paper certificates showing pre-split share counts are no longer valid for trading. To convert them, work with GE’s transfer agent, EQ Shareowner Services, at 1-800-786-2543 (or +1-651-450-4064 internationally), by mail at P.O. Box 64874, St. Paul, MN 55164-0874, or online at shareowneronline.com.13General Electric. Shareholder Services The same agent handles registered-holder questions about the GEHC and GEV distributions.
Replacing a lost certificate typically requires purchasing a surety bond costing between 1% and 3% of the shares’ current market value, which can be significant given how much GE Aerospace shares have appreciated. Call the transfer agent before doing anything else so you know the documentation they require.