Stock Spin-Out

[Tommy Trussell]

On Tue, Feb 20, 2018 at 10:02 PM, nvsoar <nvsoar at charter.net> wrote:
>
> Comment:  It seems to me that a zero cost for the spun off shares is
> incorrect if a non-zero basis exists for the pre-spin off shares.  A zero
> cost for the new shares will result in a higher than necessary capital gain
> when those shares are sold.  The easiest way to determine the new basis for
> each of the remaining entities that I have found is to use the cost basis
> calculator at the link previously provided.
> nvsoar
>
>
Usually here in the US, when a company announces a stock spin-off, the
existing shareholders are provided a passel of materials, some of which
include a determination by a tax attorney or the IRS describing how to
calculate the basis of the spun-off shares. You can usually find the
information at the spun-off company's web site (look for a link for
"investor information") or as a document available from the company's stock
transfer agent.

I can imagine that sometimes such information may not be finalized at the
time of spin-off, especially if the IRS objects to some part of it, but my
impression is that these things are almost always pretty much settled
before the time they occur because there's lots of money involved. And
nobody wants any uncertainty when there's lots of money involved...


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