Novartis spun off Sandoz effective October 4, 2023 in a transaction meant to be tax-free to NVS shareholders. Sandoz began normal trading on October 4, 2023. NVS shareholders received 1 share of SDZNY for each 5 shares of NVS owned.

This action is a simple spinoff transaction in the accounting software. It is structured to be a non-taxable event for NVS shareholders according to the shareholder prospectus. The cost basis allocation information is calculated from the average of the opening and closing prices of SDZNY and NVS on the spinoff completion date, October 4, 2023. This method to determine fair market value of the post spinoff companies is commonly used. A link to IRS Form 8937 was not available at the time these instructions were written.

Also, the Sandoz ADRs with ticker symbol SDZNY will trade on a U.S. over-the-counter (OTC) market. The myICLUB database of stock prices does not include OTC prices. When doing club valuations, the price for SDZNY will probably need to be manually entered.

NOTE:

The cost basis allocation is dependent on the prices used for both Sandoz and Novartis 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 available our instructions will use the guidance in form 8937. If your broker does not use that guidance, or form 8937 is not publicly available, 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 Accounting > Securities > Record spinoff of securities in myICLUB.com. If you are unfamiliar with spinoff transactions you can get help at this URL: https://www.myiclub.com/faq/article.aspx?id=54

Here is the information you need to complete the spinoff.

• Date: 10/4/2023
• Select Parent Security (or Parent Company) : Novartis (NVS)
• Remaining Basis Percentage: 94.755
• Cash received:  See your broker statement for cash-in-lieu received
• Spinoff  Security (or Symbol of New Company) : Sandoz (SDZNY)
• Shares received : 0.20 x (# of NVS shares owned)   (Include fractional shares.)
  • For example, if you owned 100 NVS shares, you should receive 0.20 x 100 = 20 SDZNY shares.
• Price Per Share : 26.62   (Average of opening and closing SDZNY prices on 10/4/2023)            

Save the transaction and the spinoff has been entered.