Yum Brands (YUM) spinoff of Yum Brands China (YUMC)

Yum Brands (YUM) spun off Yum Brands China (YUMC) effective October 31, 2016 in a transaction meant to be tax-free to its shareholders.

This action is a simple spinoff transaction in the accounting software.  Neither YUM nor YUMC have posted a copy of IRS form 8937 at the time of writing these instructions. Cost basis allocation was calculated using the closing prices of YUM and YUMC on 10/31/16

The information below is based on the information available from the press releases from YUM Brands posted on their web site. Please note that YUM did a stock split effective 11/1/2016. Do not use YUM prices on 11/1/16 for the spinoff. These prices take into account the stock split and if used in the spinoff will cause inaccuracies in cost basis allocation.

 

The Spinoff Entry

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.

 

Date: 10/31/16

Select Parent Security (or Parent Company) : Yum Brands (YUM)

Remaining Basis Percentage: 78.07

Cash received:  See your broker statement for cash-in-lieu received

Spinoff  Security (or Symbol of New Company) : Yum Brands China Corp  (YUMC)

 Shares received : 1. x (# of YUM  shares owned)   (Remember to include fractional shares.)

For example, if you owned 100 YUM shares, you should receive 1. x 100 = 100 YUMC shares.

Price Per Share : 24.24  (Closing price on 10/31/2016)  

Save the transaction and the spinoff has been entered.


 

YUM Brands Stock Split:

On November 1st, Yum Brands (YUM) performed a 1.39 for 1 stock split.

This is a regular stock split that can be entered by going to Accounting > Securities > Stock Split, or Transactions > Stock Split, depending on if you are using myICLUB.com , or the Desktop Club Accounting 3 program.

We suggest to skip the 'Shares After Split' box, and simply enter the split ratio; the system will figure out the number of shares based on the ratio.

Enter any cash received for fractional shares, and you can complete the transaction.

 

NOTE:

The cost basis allocation is dependent on the prices used for both Yum Brands and Yum Brands China in the cost basis calculations. In our experience brokers tend to use the prices found in the guidance companies post on their websites including IRS form 8937. As of this writing form 8937 was not available on the company web sites. If your broker does not use that guidance, the cost basis of the companies involved as recorded in your accounting records and in your broker’s records will not match. This is not cause for concern. This is just due to the inexact nature of the tax code in this regard. Partnership tax returns have specific areas to reconcile these usually small differences. ICLUBcentral tax printer software automatically fills in these adjustments in the normal operation of the software using the data imported from your accounting records and that you enter from your 1099.