Vodaphone returning shares and cash in Verizon shares

[hommie]

How do I enter this in Fund Manager?
Vodafone has announced the consolidation ratio and number of Verizon Communication shares to be allotted to shareholders. To summarise, Vodafone shareholders as at close of business on 21 February 2014 will receive:
• 0.0263001 Verizon shares for each Vodafone share as at close of business on 21 February 2014
• 6 'new' Vodafone shares in place of every existing 11 Vodafone share as at close of business on 21 February 2014
• $0.4928 per share held at close of business on 21 February 2014
• 'New' Vodafone and Verizon shares to be added to clients' accounts from 24 February 2014

Thanks, Hommie

[Mark]

Hi Hommie,

Right mouse click on your old Vodafone investment, and choose "Investment Data / Spin-off...". Record the details for your new Verizon shares being spun-off from Vodafone. Change the date to Feb 21, 2014. That dialog will show you the number of shares owned in Vodafone, so multiply that by 0.0263001 to get the number of Verizon shares being spun off. Enter that under "Shares received". You would also need to know the cost basis for these new shares, and enter it in here. Hopefully your broker can provide assistance on determining how much of your original Vodafone cost basis is to be moved to these new shares, or maybe none...

After recording the spin-off of the new Verizon shares, record a distributed distribution in your Vodafone for Feb 21 and the value is $0.4928 times however many shares you owned on that date.

Finally, record a split transaction on Feb 21 in Vodafone with a ratio of 6 for 11. Change the name/symbol under Investment Properties to whatever the new name/symbol are. If you end up with a fractional share that gets sold, you may also need to record a sell of that fractional share.

[hommie]

Thanks Mark! Was unaware that I could right click the investment to get the options. Cheers, John

[inept]

Hi Mark,

In this case, the treatment of the spin-off was as a dividend. Is the Spin-Off tool still the correct means to enter this transaction or should one manually create a dividend transaction in the Vodafone position and then a transfer-in of VZ shares?

Dan

[Mark]

Hi Dan,

That is essentially what the spin-off wizard does, so yes, still use the spin-off wizard. The spin-off wizard will divide the distribution up into an "Other" and "Return of Capital" portion, to reduce the cost basis in the parent, and also account for the market value transferred to the child.