How to handle ABT spinoff of ABBV

[sponge]

Mark:

I owned shares of ABT. They spun off a company called Abbvie and gave a stock dividend for that company. How do i properly handle this transaction in FM ? Also making sure the cost basis is properly reflected?

thanks

[Mark]

Hi sponge,

You can use the spin-off wizard, and it will record everything for you. Right mouse click on the parent investment, and choose "Investment Data / Spin-Off..." and fill in all the details in that dialog.

[sponge]

Hi Mark

Now I tried to do the same with Google situation where they issued class-C shares as dividend -- this shows up as huge amount of dividend in my distribution summary report where as in REALITY this is really a stock split with a slightly different ticker symbol. Note that trading price started out at half the price on the day of this so called "dividend".

Better way to handle this case in FM?

thanks

[Mark]

Hi sponge,

They are calling it a stock dividend...

Here is how I would suggest recording this: Change the symbol on your existing GOOG shares to GOOGL. Next, record a spin-off in GOOGL for the new child GOOG. The number of GOOG shares would be equal to the number of GOOGL shares you have. Transfer 50% of the original cost basis in the A shares to the new C shares as a tax-free type of spin-off.

You will end up with 2 distributions (Return of Capital and Other) in your Class A shares. You will have a Transfer In for the Class C shares.