Baxter spin off of Baxalta

[reddragon]

How do you record this spin off correctly to show a correct performance of Baxter. Again, this was a spin off not a split so you got equal shares in each. So Baxter had a initial purchase of 75 shares at 67.60 total of 5090.95. 5090.95 is the initial cost basis but when they spun off Baxalta the value of Baxter went down and it is showing a 53% loss in performance. How do you get this corrected?

[Mark]

Hi reddragon,

Use the "Spin-Off Wizard". Right mouse click on the parent investment (Baxter), and choose "Investment Data / Spin-off...". Fill out that dialog with all the details. It will record the necessary transactions for you to correctly reflect the performance/value change.

It will ask you for the information on the spun-off child, including name, symbol, shares received, cost basis, and market value. You also specify whether it was a tax-free or taxable spin-off.

The wizard will record distributions in the parent, and transfer(s) into into the child. There will be 2 distributions, one "Return of Capital", and one "Other". The sum of these 2 distributions will equal the market value transferred to the child. This will accurately reflect the performance of the parent, and the sudden drop in market value. The "Return of Capital" portion lowers your tax cost basis in the parent by the amount of cost basis transferred to the child. For more details, press the "Help" button in the spin-off wizard.

[reddragon]

When I put this transaction in I do not get 2 transactions a return of capital and other.

[Mark]

Hi reddragon,

Which transaction(s) do you see from the spin-off? Are you missing just one, or both? Are you looking at the parent investment from the spin-off? Are you looking at it in the Data Register under the Data Type of "All Transactions"? When you entered the spin-off did you record the cost basis and market value? Were they different?

You should get in the parent a "Return of Capital" for the amount you enter for Cost Basis of the child. You should get an "Other" distribution for the difference in cost basis and market value. These are both recorded in the parent investment.

[reddragon]

Thank you got it. I did not have correct Market value in the Data.