Accounting for a stock spin off

pms's Avatar


16 Jul, 2015 11:51 PM

On 10/1/14 ADP spun off stock of CDK. My Fidelity statement shows no change in the number of ADP stocks I own, but 30 new stocks of CDK. This is noted as a Distribution with zero cost, i.e. I acquired the CDK stock at no cost, but it was worth $33.60 at the end of the month.

I found the knowledge-base article on this, but it talks about SellXfr the old shares, then BuyXfr two sets of new shares. But My old shares (ADP) are unchanged. MD won't let me simply add shares, I guess it wants them to come from somewhere. If I try to put in a zero amount for the share price it overrides it with $100.

How can I account for a stock spin-off in the form of a distribution?
Patrick Stirling
[email blocked]

  1. 1 Posted by dwg on 17 Jul, 2015 02:03 AM

    dwg's Avatar

    I would look at how this is being handled for taxation purposes to get a guide. For example one common method is for a company to do an in place Return of capital and then an in place purchase of the new shares at a set price. It is often done this way as assets are transferred to the new company. You get no money out of it but value is transferred to the new company and this is reflect in the cost base of your investment without there being an immediate capital gain or income event.

  2. 2 Posted by pms on 17 Jul, 2015 03:17 PM

    pms's Avatar

    Sorry, I wasn't clear. I didn't mean how to account for it in the tax sense, but how to enter the transaction(s) into MD. Fidelity records it as a distribution, the new shares just appear in my account, adding value like a dividend but paid in stock. MD has a quite limited set of actions for investment transactions, none of which seem to fit this. Quicken has a simple "add" which just adds new shares to the account, but MD has no equivalent. I suppose I could find the dollar amount, record that as a dividend, then buy the shares with it, but that seems rather clumsy.

  3. 3 Posted by Tom Freeman on 22 Jul, 2015 10:31 PM

    Tom Freeman's Avatar

    Here is the Faq for how to account for a stock spin off:

    If this does not fit the particulars of how your security was spun, then please give me the exact details and I will advice a method for entering into MD

    Tom Freeman
    Infinite Kind Support

  4. System closed this discussion on 19 Mar, 2016 04:57 AM.

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