How Do I Account for a Share Distribution by MODIV, of GIPR?

PeterMorris12

MODIV switched out a preferred security of GIPR for the common shares, and then distributed most of these shares to MODIV common shareholders at a rate of .28 GIPR share for each MODIV share. Though I've used Quicken since ~1992, I can't figure out a way to enter these transaction into Quicken Premier/DOS.

Tom Young

This is only a guess as it doesn't seem like either company has really addressed the correct accounting (tax) treatment. In effect you have a Distribution in Kind here so my assumption is that the distribution is taxable, as a dividend, based on the value of the stock received. (The date to be used to determine that value is unclear.)

If that's correct then the sequence of transactions that would account for this would be to record a cash dividend in the amount of the value received, then use that "cash" to buy the correct number of shares of the new stock.

You may have to go back and revisit this later when more information is available.

q_lurker

I agree with @Tom Young that this sounds like a dividend and buy shares event. From the Dec 29, 2023 press release (emphasis added):

Based on GIPR’s most recent closing price, the distribution of 0.28 shares of GIPR common stock for each outstanding share of Modiv’s Class C common stock and Class C Units of Modiv OP equates to a one-time dividend of $1.11 of GIPR stock, which represents a special dividend yield of 7.4% based on MDV’s most recent closing price. 

Separately in that same press release:

No fractional shares of GIPR common stock will be distributed on Modiv Industrial common stock or Modiv OP Class C Units and, instead, as to any fractional shares, the Company will round down to the nearest whole share of GIPR common stock. 

It seems odd that there is no mention of cash-in-lieu for the undistributed fractional shares. The statement may or may not be accurate in that regard.

PeterMorris12

I appreciate these two comments, to which I'll respond, as a courtesy. (That is, nothing will be gained from further discussion. The suggestion to "wait" for further information, is wise, of course.

First, by inattention to this barely-significant stock, we overlooked any advance announcements that might have come to us.

Second, somewhere in my follow-up research, I believe I read that the distribution would be dependent on judgment that it would be a non-taxable event.

Third, we only discovered and noticed that the event had occurred, when we discovered a 52¢ amount in the relevant account's "core" fund. [This speaks to the q_lurker observation, "It seems odd that…"

Fourth: yes, the whole thing seems odd to us! But, as is so-often the case with odd, mathematical issues that show up out of nowhere in later years, it's been a good challenge to calculate the percentages and amounts and values, among the relevant securities.

Thanks for the thoughtful assistance.😎