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SPINOFF: EchoStar Commumnications (DISH) and EchoStar Holding (SATS)
Issue:
On 1/1/2008 EchoStar Communications Corporation [DISH] distributed 0.2 shares of EchoStar Holding Corporation [SATS] for each share of DISH owned in a regular spinoff.
Cause:
This is a normal spinoff. You can read about this transaction at http://dish.client.shareholder.com/faq.cfm .
The Internal Revenue Service allows any method of cost basis allocation between a parent and spun off company which is reasonable, and fits the facts. The usual method is to allocate on the basis of relative total market values of the two companies, immediately after the spinoff. Before the company made available their method, we computed the percentage of basis to be retained by the parent. Now the company has made their computatation available, and it is slightly different from our original calculation. To avoid confusion, we are adopting the company's figure. Clubs that used our original calculated figure may change that figure, but it is not nececessary.
Resolution:
Enter the spinoff transaction in accordance with the instructions at
http://www.iclub.com/support/kb/default.asp?page=normal_spinoff.
Here's the information you need for the spinoff:
1. Spinoff date - 1/1/2008
2. Parent company - EchoStar Communications Corporation [DISH]
3. Remaining basis percentage of Parent Company, [DISH] - 82.5610.
4. Number of shares held in parent company - provided by software.
5. There is one daughter company - EchoStar Holding Corporation [SATS]
6. Number of shares of SATS received - This will be the number of shares owned in DISH multiplied by 0.2 (make sure to include fractional shares).
7. Price per share of daughter company - $35.
8. Cash received in lieu of fractional shares - take from broker statement.
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