ConAgra spun off Lamb Weston effective 11:59 pm EST November 10, 2016 in a transaction meant to be tax-free to its shareholders. A link to the SEC filing regarding this spinoff can be found on the Lamb Weston web site at https://investors.lambweston.com/stock-and-filings/sec-filings Click on the PDF file icon to view Form 10-12B/A dated 10/17/16. The cost basis allocation information is calculated using the average of the open and close prices of CAG and LW on 11/10/16, the first trading day after the spinoff. Neither CAG nor LW has posted a copy of IRS form 8937 concerning cost basis allocation at the time these instructions were written.
This action is a simple spinoff transaction in the accounting software. The information below is based on the information available from the cost basis allocation information on the ConAgra web site.
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.
Select Parent Security (or Parent Company) : ConAgra (CAG)
Remaining Basis Percentage: 77.407
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : Lamb Weston Corp (LW)
Shares received : 0.3333 x (# of CAG shares owned) (Remember to include fractional shares.)
For example, if you owned 100 CAG shares, you should receive 0.3333 x 100 = 33.33 LW shares.
Price Per Share : 31.185 (Average of high and low price on 11/10/2016)
Save the transaction and the spinoff has been entered.
The cost basis allocation is dependent on the prices used for both ConAgra and Lamb Weston 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. 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.