Madison Square Garden changed its name to MSG Network. MSG Network then spun off Madison Square Garden Co. effective October 1, 2015 in a transaction meant to be tax-free to its shareholders. The cost basis allocation information is from IRS form 8937, which was posted in the investor relations area of the MSG Network web site. In their example, MSG Network used the volume weighted average prices on October 1, 2015 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 MSG Network web site.
The Name Change
Use the Security Settings to change the name of the original Madison Square Garden to MSG Network. Also change the ticker symbol to MSGN.
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) : MSG Network (MSGN)
Remaining Basis Percentage: 25.5
Cash received: See your broker statement for cash-in-lieu received
Spinoff Security (or Symbol of New Company) : Madison Square Garden Co. (MSG)
Shares received : 0.33333x (# of MSGN shares owned) (Remember to include fractional shares.)
For example, if you owned 100 MSGN shares, you should receive 0.33333 x 100 = 33.333 MSG shares.
Price Per Share : 52.7185 (Volume weighted average from 10/1/15)
Save the transaction and the spinoff has been entered.
The cost basis allocation is dependent on the prices used for both MSG Network and Madison Square Garden Co. 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.