Cause: GSK, plc spun off Haleon (HLN) with GSK shareholders receiving 1 HLN share for each GSK share. The transaction was called a demerger in GSK communications. GSK, plc then completed a reverse split immediately after the spinoff. The exchange/split ratio was 4 new for 5 old shares. HLN shares and new GSK shares would trade on a when-issued basis from the effective date of July 18, 2022 until the issue date which was expected to be July 22, 2022.
Resolution:
This action will need multiple entries in the accounting software. The information below is based on the information available from the GSK web site. A spinoff entry will be needed to record this transaction and a reverse split for GSK.
The remaining basis percentage was calculated using the average of the opening and closing prices of GSK and HLN on July 18, 2022. A form 8937 for this spinoff was not available on the GSK website when these instructions were written.
Important Notes : This transaction was designed to be tax-free. The IRS declined to issue a tax letter to this effect when GSK requested a tax letter. This doe not mean the transaction is a taxable event. However, it is possible the IRS may rule this a taxable event some time in the future. In that event, new instructions will be written to account for the changed tax consequences.
The basis allocation calculations use market value components. Tax law does not specify a specific method to determine market value. The method used for these instructions may differ from the method used by your broker. This does not make your records “wrong” if you used the basis allocation in these instructions. The difference between your records and the broker is due only to the inexact nature of the tax code in this situation. Tax return forms do have specific areas to report these usually small differences. ICLUBcentral tax printer software handles these adjustment entries automatically in the normal operation of the software.
The Spinoff Entry
Go to Accounting > Securities > Record spinoff of securities in myICLUB.com. 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.
Save the transaction and this spinoff has been entered.
The Reverse Split Entry
Go to Accounting > Securities > Record spinoff of securities in myICLUB.com. If you are unfamiliar with spinoff transactions you can get help at this url: http://www.iclub.com/support/kb/default.asp?page=normal_split
Here is the information you need to complete the reverse split. Enter this transaction after the spinoff transaction.