Spinoff of Madison Square Garden Entertainment (MSGE) from Madison Square Garden Sports (MSGS)

Madison Square Garden spun off Madison Square Garden Entertainment effective April 17, 2020 in a transaction meant to be tax-free to Madison Square Garden shareholders. Madison Square Garden also changed its name to Madison Square Garden Sports and its ticker symbol to MSGS

This action is a simple spinoff transaction in the accounting software. It is structured to be a non-taxable event for Madison Square Garden  shareholders. The cost basis allocation information is calculated from the volume weighted average prices of MSGE and MSGS on the first full trading day after effective date of the spinoff, April 20, 2020. This information is from IRS form 8937 posted on the Madison Square Garden Sports web site.

NOTE: The cost basis allocation is dependent on the prices used for both Madison Square Garden (Sports) and Madison Square Garden Entertainment in the cost basis allocation 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.

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: http://www.iclub.com/support/kb/default.asp?page=normal_spinoff

Here is the information you need to complete the spinoff.  

  • Date: 4/17/2020
  • Select Parent Security (or Parent Company) : Madison Square Garden (MSG)
  • Remaining Basis Percentage: 72.57
  • Cash received:  See your broker statement for cash-in-lieu received
  • Spinoff Security (or Symbol of New Company) : Madison Square Garden Entertainment (MSGE)
  • Shares received : 1.0 x (# of MSG  shares owned)
    • Remember to include fractional shares. For example, if you owned 100 MSG shares, you should receive 1.0 x 100 = 100 MSGE shares.
  • Price Per Share : 68.46  (Volume weighted average price on 4/20/2020)
  • Save the transaction and the spinoff has been entered.

The Name Change Entry

Madison Square Garden also changed its name to Madison Square Garden Sports and its ticker symbol to MSGS. This change can be accomplished by changing the name and ticker symbol for Madison Square Garden using its Security Profile (Accounting > Securities > Security Settings). An alternative way to accomplish the name and ticker symbol change is to use a merger transaction, merging Madison Square Garden with Madison Square Garden Sports. The merger transaction has the benefit of showing returns for MSGS since the spinoff only. It also keeps old valuations from possibly missing MSG prices due to the ticker symbol change.


Merger for a Name Change

Enter a merger for Madison Square Garden (MSG) dated 4/20/2020. The number of MSGS shares received is the same as the number of old MSG shares owned. The price of the new MSGS shares on the merger date was 181.09. This is the volume weighted average price on 4/20/2020, the price used for the spinoff cost basis allocation for MSGS.