Entering the spinoff of Apergy (APY) from Dover Corporation (DOV)
Background: Dover spun off Apergy effective May 9, 2018 in a transaction meant to be tax-free to its shareholders. Apergy began normal trading on the NYSE on May 9, 2018.
The cost basis allocation information is from IRS form 8937, a copy of which was found in the Investor Relations area of the Dover web site. In their example Dover used the average of the high and low prices on May 9, 2018 to calculate the cost basis allocation.
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 Dover 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) : Dover (DOV)
Remaining Basis Percentage: 79.36
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : Apergy Corp (APY)
Shares received : 0.5 x (# of DOV shares owned) (Remember to include fractional shares.)
For example, if you owned 100 DOV shares, you should receive 0.5x 100 = 50 APY shares.
Price Per Share : 39.81 (Average of high and low price on 5/9/18)
Save the transaction and the spinoff has been entered.
The cost basis allocation is dependent on the prices used for both Dover and Apergy 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.