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SPECIAL DIVIDEND: Weyerhaeuser

Issue:

How do I enter the Weyerhaeuser special dividend?

Cause:

In preparation for a possible conversion to a REIT, WY issued a special dividend to comply with REIT income distribution regulations. The dividend was paid in stock or a combination of cash and stock depending on the election of the shareholder. The SEC filing concerning this special dividend can be found at the following url:
http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?c=92287&fid=7036479

Resolution:

This is a fully taxable dividend even though you may have received only more shares of WY. To fully account for this transaction may require up to three transaction entries.

The first is a dividend received from WY. The reported total value received is $26.46 per share of WY held before the dividend. Multiply this amount by the number of shares you owned before the dividend. For example, if you owned 100 shares, your dividend received would be (26.46 x 100) = 2646.00. You would enter 2646 as the amount of the dividend.
The date of the dividend was 8/29/2010.
The ex-dividend date for this dividend was 7/22/2010.
You might want to make a remark that this is a special dividend.
Use the Suspense account to receive the funds from this dividend.

The next transaction is a transfer from the Suspense account to the Broker account. Add up all the cash received in this transaction including the cash-in-lieu of fractional shares. Transfer this amount from the Suspense account to the Broker account. If you did not make the cash election this amount will be the cash-in-lieu received. Date the transfer 8/30/2010

The final transaction is a buy transaction.
Date this transaction 8/30/2010.
The number of shares of WY bought will be the WHOLE number of shares received as reported on your broker statement.
The total amount paid should be (26.46 x the number shares held before dividend) – cash received.
The amount should also be what remains in the Suspense account after the transfer noted above. (Assuming the Suspense account balance before the WY dividend entry was zero. If this was not the case, the amount should be what is needed to bring the Suspense account back to the same balance it had before the dividend was entered.)

To check the broker statement amounts, the dividend was reported to be paid in the following manner:
Cash plus stock – $4.0328 cash plus 1.4434 new shares for each share held before the dividend
Stock only – 1.70292 new shares for each old share held before the dividend.
The amounts listed above are rounded.



 
  
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