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How to enter a normal spinoff

A spinoff occurs when a company issues additional shares of one or more different securities to its existing shareholders. The issuing company is known as the parent company. Any resulting securities are known as daughter companies. The company reports to existing shareholders what percentage of their cost basis in the parent security they can allocate to the daughter security. This percentage is called the Remaining Basis Fraction

Information required to enter any spinoff:

  1. Total shares owned of the parent company
  2. - provided by the software
  3. Shares received in daughter company, including any fractional shares
  4. - from the broker statement
  5. Cash received
  6. - from the broker statement
  7. Price per share for daughter company
  8. - from any stock quote provider, like http://finance.yahoo.com
  9. Number of daughter companies
  10. - from the company's Investor Relations
  11. Spinoff date
  12. - from the company's Investor Relations
  13. Remaining Basis Fraction of Parent Company. (Examples: .94524, 94.524%) - from the company's Investor Relations
    If the information you receive on the spinoff only gives you the Child basis fraction, subtract this from 1 to get the Parent Remaining Basis Fraction
  14. Fractional shares
  15. - Most broker statements only give you the whole shares, selling off the fractional shares for cash. You may have to calculate the fractional shares. For example, if you owned 39 shares of Stock ABC, each holder of ABC received 1 share of XYZ for every 10 shares of ABC they held. The club gets 3.9 shares of XYZ, and the 0.9 shares are sold off at the going rate of XYZ on the date of the merger. If that's $20, the club gets $18 cash-in-lieu.

To enter a new Spinoff transaction in Club Accounting 3

1) From the top toolbar, select Transactions > Spinoff

2) Transaction Date - You may use the dropdown calendar function to select a date, or you can type in the date directly into the Transaction Date field. The default is the current date.

3) Select Transaction Type - this should already be set to Spinoff.

4) Select Account - select the account to receive any cash-in-lieu from this transaction. The dropdown list includes all active accounts.

5) Select Parent Security from the drop-down list, choose the parent company, the one that issued the spinoff. If the security does not appear on the list, select Show Inactives to show securities that have been sold.

6) Old Security Price Per Share Leave this blank.

7) Remaining Basis Percentage Enter the remaining basis percentage as a percentage (XX.XX%), as provided by the Parent's Investor Relations.

8) Spinoff Security click Add New Security to add a security profile first. Then, use the row with the new daughter security for the next two steps.

9) Shares Received Click in the field to enter the number of shares received. You must include any fractional shares if cash was received for that fractional share. Club Accounting will then automatically enter a Sell transaction for the fractional share for you for the amount entered in the Cash Received field. For the example above, you would enter 3.9 shares, not just 3 shares, even if your broker statement says only 3 shares.

10) Price per Share Click in the field to enter the price of a single share of the daughter company on the day of the spinoff.

11) Cash Received Enter any cash received in place of a fractional share. Club Accounting will then automatically enter a Sell transaction for the fractional share for you for this amount and any fractional share entered in the Shares Received field. The transaction cannot be saved if an amount is entered here but no fractional share is included in the Shares Received field.

Click the OK button to add the transaction. The Confirm Transaction window appears asking you to review the details of the entry. If the information is correct, click the OK button to record the transaction. If not, click the Cancel button to return to the Enter New Transaction Merger screen.

To enter a normal Spinoff transaction in Club Accounting Online

1) Select Accounting > Securities > Spinoff

2) Date - type the date directly into the Date field.

3) Parent Company from the drop-down list, choose the Parent company, the one that issued the spinoff.

4) Number of Daughter Companies In general, this is just one. If you received stock in more than one company as a result of this spinoff, record the number of companies in which you received stock.

Click continue to move to the next page.

5) Price per Share skip this step.

6) Remaining Basis Percentage Click the radio button and enter the remaining basis percentage as a percentage (XX.XX%), as provided by the Parent's Investor Relations.

7) Symbol of the new company Enter the ticker for the daughter company.

8) Shares Received Click in the field to enter the number of shares received. You must include any fractional shares if cash was received for that fractional share. Club Accounting will then automatically enter a Sell transaction for the fractional share for you for the amount entered in the Cash Received field. For the example above, you would enter 3.9 shares, not just 3 shares, even if your broker statement says only 3 shares.

9) Price per Share Enter the price of a single share of the daughter company on the day of the spinoff.

10) Cash Received Enter any cash received in place of a fractional share. Club Accounting will then automatically enter a Sell transaction for the fractional share for you for this amount and any fractional share entered in the Shares Received field. The transaction cannot be saved if an amount is entered here but no fractional share is included in the Shares Received field.

10) Account - select the account to receive any cash-in-lieu from this transaction. The dropdown list includes all active accounts.

Click Submit to complete the transaction



 
  
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