Due to a separation of REITS from the financial sector ETF, State Street Global Advisors distributed a special dividend to holders of XLF in the form of shares of its Real Estate ETF, XLRE. The value of the distribution was estimated at $4.44356 per XLF share. This distribution is considered a combination of return of capital and ordinary income. The estimated portion of each is 74% return of capital and 26% ordinary income. This is an estimate from State Street Advisors. The final number may be different and will be reported on your 1099 in early 2017. You may need to make adjustments to your entries after receiving the 1099. State Street has given no guidance on the holding period of the XLRE shares. In general, if you may realize income/gain from a stock dividend then the new shares start their holding period on the day of distribution. These instructions adhere to these general guidelines.
This action will need three entries in the desktop accounting software and two entries in the online version. The information below is based on the information available Business Wire. The information can be found at this link: https://www.businesswire.com/news/home/20160919005845/en/State-Street-Global-Advisors-Announces-Dividend-Distributions .
All owners of XLF should first determine the amount of each type of distribution.
The cash value of the distribution is $4.44356 per XLF share. Multiple your total XLF shares by this value.
Total value of distribution = 4.44356 x (# of XLF shares owned)
If you owned 1000 shares of XLF this would be 4443.56
Amount of Return of capital = Total value x .74
For our 1000 share example this would be 4443.56 x .74 = 3288.23
Amount of Ordinary Income = Total value x .26
For our 1000 share example this would be 4443.56 x .26 = 1155.33
Instructions for Club Accounting 3 Users
The Return of Capital Entry
Go to Transactions > Dividend or Distribution Here is the information you need to complete the distribution entry.
Date: 9/22/2016
Select Transaction Type : Dividend or Distribution
Amount: [4.44356 x (# of XLF shares owned) x .74 (See above instructions)
Ex-Dividend date: 9/19/16 (Should not be needed for a return of capital)
Type : Return of Capital
Select Security: Select Financial Sector SPDR Fund (XLF).
Save the transaction and the Return of Capital has been entered.
The Ordinary Income Entry
Go to Transactions > Dividend or Distribution Here is the information you need to complete the distribution entry.
Date: 9/22/2016
Select Transaction Type : Dividend or Distribution
Amount: [4.44356 x (# of XLF shares owned) x .26 (See above instructions)
Ex-Dividend date: 9/19/16 (Should not be needed for a capital gain)
Type : Short-term capital gain
Select Security: Select Financial Sector SPDR Fund (XLF).
Save the transaction and the Ordinary income portion has been entered.
Short-term capital gain distributions are taxed at ordinary income rates. This is why short-term capital gain is selected as the type.
The Buy Entry
Go to Transactions > Buy Here is the information you need to complete the buy.
Date: 9/22/2016
Select Security : Real Estate Select Sector SPDR Fund (XLRE)
Number of Shares Bought : .139146 x (# of XLF shares owned). You may want to round this number to match your broker records.
Net Total of Purchase: This should match the total value amount calculated above.
(4.44536 x [# of XLF shares owned]) Round this to nearest penny.
Save the buy transaction and you have completed the entries needed to record this special dividend
Instructions for Myiclub.com Users
The Distribution Entry
Go to Accounting > Securities > Cash Distribution
Click the linkADD ANOTHER DISTRIBUTION TYPE TO THIS TRANSACTION
Here is the information you need to complete the distribution entry.
Date: 9/22/2016
Symbol : XLF
Ex-Dividend date: 9/19/16 (Enter is field is available.)
Type : Return of capital
Amount: [4.44356 x (# of XLF shares owned) x .74 (See above instructions)
Type : Short-term capital gain
Amount: [4.44356 x (# of XLF shares owned) x .26 (See above instructions)
The Buy Entry
Go to Accounting > Securities > Buy
Here is the information you need to complete the buy.
Date: 9/22/2016
Select Security : Real Estate Select Sector SPDR Fund (XLRE)
Number of Shares Bought : .139146 x (# of XLF shares owned). You may want to round this number to match your broker records.
Net Total of Purchase: This should match the total value amount calculated above.
(4.44536 x [# of XLF shares owned]) Round this to nearest penny.
Save the buy transaction and you have completed the entries needed to record this special dividend
Important Reminder:
The information from State Street regarding this special dividend specifically states that the proportion of the dividend allocated to return of capital and ordinary income may change. You may need to adjust the distributions after receiving the 1099 in early 2017.
