International Paper Spins off Sylvamo.

International Paper has just spun off Sylvamo Corp. Can someone tell me what transactions to enter in Quicken for Windows to reflect this new company and its shares? My brokerage is no longer uploading the proper transactions as they used to. Historically, it seems to be multiple transactions, including Return of Capital for IP and then a simple “Bought” for SLVM. There is also cash in lieu of fractional shares. Does the spinoff affect the basis cost for IP. Is that true? How do I capture that?

Thanks.

Best Answers

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    That appears to be a straightforward spinoff.  Use the Enter Transactions button, Corporate Securities spinoff, IP and Sylvamo as the companies, 0.090909 for the share ratio (1 for 11).  

    If you already have a Sylvamo security created in your file from a brokerage download, you will need to delete those related transactions and that security.

    For the two prices to enter -- With the appropriate caveats, IP in their Form 8937 used 53.26 and 33.00 as the fair market values.  Your broker may have used different values.  Those values should lead to IP retaining just under 99% of your prior cost basis (94.6676%) with just over 5% transfering to the Sylvamo holding.

    After execution of that spinoff, if there are fractional shares created, they should be sold for any Cash-in-lieu payment you received.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    WSC said:
    Excellent. My broker sent me a sheet with some of this data, but when I take the total value of SLVM (as provided by him) and divide it by the shares I got, the results give different price/share values for my three accounts. They should all be the same, right? Did he mess up?
    What is the "total value" as provided by him supposed to represent?  He may well be providing you with your cost basis in each account.  The current value/share in each account should be the same, but if you bought IP in the three accounts at very different times, the basis/share that transferred to SLVM could be likewise very different. 

    Example:  Account A you bought IP at $10/share.   Your Account A SLVM would have a basis of about $5.5/share.  Account B you bought IP at $25/share.  Your Account B SLVM would have a basis of about $14/share = 2.5 times higher.  Both accounts would have the current value of the SLVM shares in the $33/share range.  
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    WSC said:
    That's exactly what he did. Great answer. So then the "cash in lieu of fractional shares" then is determined by what share price? My "back into it" calcs are close for all three share prices but differ by $0.20 or so. Is this the stock value on the day of the spin-off?
    The CIL price can vary because you are talking about fractions of a share and a few dollars and cents.  The company typically establishes the price based on market prices a few days after the spinoff.  Looking at prices in the first few days of trading, I'd expect something in the high 20s.  Anything in the 30's would appear to be a bonus.  I can easily see the $0.20 variations depending on size of the fractional share.      

Answers

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    That appears to be a straightforward spinoff.  Use the Enter Transactions button, Corporate Securities spinoff, IP and Sylvamo as the companies, 0.090909 for the share ratio (1 for 11).  

    If you already have a Sylvamo security created in your file from a brokerage download, you will need to delete those related transactions and that security.

    For the two prices to enter -- With the appropriate caveats, IP in their Form 8937 used 53.26 and 33.00 as the fair market values.  Your broker may have used different values.  Those values should lead to IP retaining just under 99% of your prior cost basis (94.6676%) with just over 5% transfering to the Sylvamo holding.

    After execution of that spinoff, if there are fractional shares created, they should be sold for any Cash-in-lieu payment you received.
  • WSC
    WSC Member ✭✭
    Excellent. My broker sent me a sheet with some of this data, but when I take the total value of SLVM (as provided by him) and divide it by the shares I got, the results give different price/share values for my three accounts. They should all be the same, right? Did he mess up?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    WSC said:
    Excellent. My broker sent me a sheet with some of this data, but when I take the total value of SLVM (as provided by him) and divide it by the shares I got, the results give different price/share values for my three accounts. They should all be the same, right? Did he mess up?
    What is the "total value" as provided by him supposed to represent?  He may well be providing you with your cost basis in each account.  The current value/share in each account should be the same, but if you bought IP in the three accounts at very different times, the basis/share that transferred to SLVM could be likewise very different. 

    Example:  Account A you bought IP at $10/share.   Your Account A SLVM would have a basis of about $5.5/share.  Account B you bought IP at $25/share.  Your Account B SLVM would have a basis of about $14/share = 2.5 times higher.  Both accounts would have the current value of the SLVM shares in the $33/share range.  
  • WSC
    WSC Member ✭✭
    That's exactly what he did. Great answer. So then the "cash in lieu of fractional shares" then is determined by what share price? My "back into it" calcs are close for all three share prices but differ by $0.20 or so. Is this the stock value on the day of the spin-off?
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    Accepted Answer
    WSC said:
    That's exactly what he did. Great answer. So then the "cash in lieu of fractional shares" then is determined by what share price? My "back into it" calcs are close for all three share prices but differ by $0.20 or so. Is this the stock value on the day of the spin-off?
    The CIL price can vary because you are talking about fractions of a share and a few dollars and cents.  The company typically establishes the price based on market prices a few days after the spinoff.  Looking at prices in the first few days of trading, I'd expect something in the high 20s.  Anything in the 30's would appear to be a bonus.  I can easily see the $0.20 variations depending on size of the fractional share.