Liberty Interactive split off Liberty Expedia effective November 4, 2016 in a transaction meant to be tax-free to its shareholders. Liberty Expedia began normal trading on the NYSE November 7, 2016.
The cost basis allocation information is from IRS form 8937, which was found on the Liberty Interactive web site.
This action requires a simple spinoff transaction in the accounting software followed by a reverse stock split. The information below is based on the information available from the cost basis allocation information on the Liberty Interactive web site.
The Spinoff Entry
Go to Transactions > Spinoff 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_spinoff
Here is the information you need to complete the spinoff.
Select Parent Security (or Parent Company) : Liberty Interactive (LVNTA)
Remaining Basis Percentage: 60.0
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : Liberty Expedia Corp (LEXEA)
Shares received : 0.4 x (# of LVNTA shares owned) (Remember to include fractional shares.)
For example, if you owned 100 LVNTA shares, you should receive 0.4 x 100 = 40 LEXEA shares.
Price Per Share : 43.21 (Closing price on 11/7/16, first trading day)
Save the transaction and the spinoff portion has been entered.
The Stock Split Entry
Go to Transactions > Stock Split or Accounting > Securities > Record spinoff of securities
Company: Liberty Interactive (LVNTA)
Split ratio: 6 for 10
Cash for fractional share: See your broker statement
Save the transaction and the reverse split portion has been completed.
The cost basis allocation is dependent on the prices used for both Liberty Interactive and Liberty Expedia 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.