Pfizer divested of its interest in Zoetis by exchanging Pfizer shares for Zoetis shares. Pfizer shareholders received .9898 shares of Zoetis for each Pfizer share accepted in the exchange offer. The offer was oversubscribed so the shares accepted for exchange were prorated to the total shares of Zoetis offered by Pfizer. According the SEC filing concerning this transaction, this should be a non-taxable event.
The cost basis and holding period allocation information can be found on the Zoetis web site at:
https://investor.zoetis.com/sec-filings. Click the link for form S-4/A dated 6/3/2013.
Resolution:
This action will need two entries in the accounting software; a Spinoff and a Reverse Split. The information below is based on the information available from Zoetis in the document referenced above.
Go to Transactions > Spinoff or Accounting > Securities > Record spinoff of securities depending on the version of the software being used. If you are unfamiliar with spinoff transactions you can get help at this URL:
https://www.iclub.com/support/kb/default.asp?page=normal_spinoff
Here is the information you need to complete the spinoff.
Due to the variety of shares accepted for exchange there is not a single Remaining Basis Percentage for this transaction. Each participant will need to calculate their particular Remaining Basis Percentage. Use the equation below to calculate your specific Remaining Basis Percentage :
Remaining Basis Percentage = (Pfizer shares owned after exchange/ Pfizer shares owned before exchange) x 100.
For example, 25 shares were accepted for exchange. You owned 125 shares before the exchange and 100 shares after the exchange. Your Remaining Basis percentage would be 100/125 = .8 = 80%. You would enter 80 for your field for Remaining Basis Percentage
This procedure will reduce the cost basis proportionally among all your Pfizer purchases.
Date: 6/24/2012
Select Parent Security (or Parent Company) : Pfizer (PFE)
Remaining Basis Percentage: Enter your calculated amount using the above equation.
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : Zoetis (ZTS)
Shares received : .9898 x (#of PFE shares exchanged) (Remember to include fractional shares.)
For example, if you exchanged 100 PFE shares, you should receive .9898 x 100 = 98.98 ZTS shares.
Price Per Share : 30.265 ( This is the average of the open and close prices of Zoetis on 6/24/2013. Opened at 30.15; closed at 30.38).
Go to Transactions > Stock Split or Accounting > Securities > Record Stock split depending on the version of the software being used. If you are unfamiliar with spinoff transactions you can get help at this url: https://www.iclub.com/support/kb/default.asp?page=normal_split
Here is the information you need to complete the reverse split.
You will need to calculate the spit ratio individually. Use the equation below:
Split ratio = (post exchange # of Pfizer shares) for (pre-exchange number of Pfizer shares)
For example, after the exchange you owned 100 shares, before the exchange 125 shares. For this transaction the ratio would be 100 for 125. Be sure to use exact numbers if you own Pfizer in a Dividend Reinvestment Plan.
Date: 6/24/2013
Security : Pfizer (PFE)
Split Ratio : Use the amount calculated from theequation:
Split ratio = (post exchange # of Pfizer shares) for (pre-exchange number of Pfizer shares)
Cash for Fractional Share : See your broker statement. Do not confuse the amount with the cash received for fractional shares in the spinoff described above.
Save the transaction and the reverse split has been entered. The full exchange is complete when both transactions are entered correctly.