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Class A common stock dividend payable by shares of Class B stock

Crenshaw

Windows Classic subscription, R63.21

Ramaco Resources, Inc (METC, METCB) declared a quarterly Class A common stock dividend of $0.06875 per share of Class A common stock (METC) payable on June 13, 2025 to shareholders of record…with the dividend to be paid in shares of Class B common stock (METCB).

Class A common stockholders will receive a number of shares of Class B common stock for each share of Class A common stock determined by dividing $0.06875 by the closing transaction price of the Class B common stock on May30, 2025, which was $7.45 per share (the "Class B Closing Price").

Thus, each Class A common stockholder will receive 0.009228 of one share of METCB for each share of METC held on the Record Date.

No fractional shares will be issued; in lieu thereof, company will pay cash.

My eTrade account listed a "stock spinoff" of the METCB shares on 6/13, and the cash in lieu of fractional shares as "security sold" on 6/16.

Quicken reflected the deposit of the cash. It's only other reference to the transaction was the "removal" of the shares of METCB. When I look at my "holdings," Quicken shows the correct number of METC shares but reflects a negative number of METCB shares. There is no reference to a METC dividend.

How should I accurately reflect what happened so that Quicken shows a positive number of METCB shares. What action "should have been" used to categorize this transaction? I think it will be important to reflect the "dividend" and also to establish the cost of the METCB shares (this is in a taxable brokerage account)

Thanks in advance

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NotACPA

Receive the cash from Class A, purchase the Class B whole shares. Remaining cash is "in lieu".

OR, you could purchase full and fractional Class B and then sell the fraction … all depending upon what your broker reflects.

q_lurker

The key consideration I see missing is the tax treatment of the 'stock dividend' shares.

I see on the Ramaco Resources, Inc website that they did a similar stock dividend in March, 2025. For that deal, they filed a Form 8937 identifying the transaction as non-taxable. From that form:

The shares received as part of the common stock dividend are expected to be treated as a nontaxable event to the shareholder pursuant to Section 305(a) of the Internal Revenue Code of 1986, as amended. The receipt by shareholders of the stock dividend affects such shareholder’s tax basis in the Company’s stock.

By that understanding and their related example, this is more analogous to a Corporate spinoff, but even that is not an easy translational.

I'll try to figure out some clearer instructions. perhaps over the weekend. It will still be a "What I would do is …" situation that may or may not be consistent with your needs or desires.

In the meantime, do you have one lot of METC or several lots?

Do you know what value (cash) you are receiving for your fractional shares?

Tom Young

ASSUMING the dividend paid in shares is tax free - I'd think at some point Ramaco Resources will clarify that - then the spinoff wizard can be used for the B shares received. The spin off wizard will include the fractional share that you didn't receive. You can then sell the fractional share for the amount of the CIL received, resulting in the correct number of shares of the B stock and the correct cash.

q_lurker

Some of the issues with using the Corporate Spinoff and this specific company -

Whenever the Corp Spinoff action in Quicken is used, it has to spin off a new company. Fine for the first such dividend, but subsequent ones have to spin off a 'temporary' new company, then the user edits the generated new company transactions to be METCB shares. PITA.
Corp Spinoff takes the given share prices of the two securities and allocates basis accordingly. This company's Form 8937 has allocated basis using only number of shares independent of the relative values of the shares. That is an unusual approach I have not seen before. The investor then needs to cross check that approach against the approach taken by the brokerage to determine the basis transfer, since the Form 8937 approach is not mandatory. Determining the right prices to generate the right basis and performance data in Quicken might take some thought.
I would assume the newly generated Class B shares carry over the acquisition dates of the original shares on a by-lot basis. I did not see that documented. So if a user happened to have three lots of METC, each quarter that dividends got paid in Class B shares, they would get 3 lots of METCB shares - all fractional shares subject to some type of cash-in-lieu sale. What a headache. How is the broker addressing the lot structure?

FWIW: Ramaco issued the 8937 on March 31 for the March 16 dividend and on Jan 10 for the Dec 16, 2024 dividend.

Crenshaw

I'll try to answer the questions posed:

Here's what Ramaco says about the cash in lieu: "No fractional shares will be issued in connection with the above-described stock dividend. In lieu of the issuance of fractional shares, the Company will pay in cash on the Payment Date the fair value of the fractions of a share issuable, determined as of the close of Nasdaq on the Record Date and based upon the Class B Closing Price."
ETrade reflects a deposit in amount of cash reflecting "Cl B Cash in lieu Fractional share full share price $7.43."

I guess my main quibble with Quicken is why it deleted the 8 shares as opposed to adding them. My brokerage account correctly reflects the new shares.

Tom Young

"Here's what Ramaco says about the cash in lieu: 'No fractional shares will be issued in connection with the above-described stock dividend. In lieu of the issuance of fractional shares, the Company will pay in cash on the Payment Date the fair value of the fractions of a share issuable, determined as of the close of Nasdaq on the Record Date and based upon the Class B Closing Price.'"

That's very common when a corporate action (e.g., split) creates fractional shares. The corporation doesn't want to go through the effort to send out thousands and thousands of fractional shares to thousands and thousands of share holders. So the fiction is that you actually received those shares and then immediately sold them. So that's the best accounting fiction you can use too. (I know for a fact that many shareholders don't understand these transaction and end up simply reporting the CIL as a form of income.)

"ETrade reflects a deposit in amount of cash reflecting 'Cl B Cash in lieu Fractional share full share price $7.43.;"

That too is the most common reporting from brokers. I've gone though quite a few corporate actions resulting in fractional shares and never seen anything different then the CIL notation.

What you MUST understand if you're going to use Quicken to account for investment transactions is that you simply can't rely solely on "downloads" to keep your accounting correct. Lots of plain-vanilla transactions - buys, sell, dividends, etc. - DO get reported properly but corporate actions are frequently wrong, and you need to correct them.

So speaking very generally, and maybe not too helpfully, you need to figure out what the end results should be, figure out what actions in Quicken will get you to the correct answer, and then delete the downloads and make your entries.

As @q_lurker stated, the Form 8937 issued for this dividend uses a very odd method,( to me) of allocating basis to the new shares but it's a simple enough calculation for you to make. Looking at your broker's web site as to how they handled the distribution of shares should allow you to "reverse engineer" their method, then simply mimic the method they used in Quicken.

Crenshaw

Thank you, Tom Young, et al. Very helpful. I appreciate the time you've taken to review and reply.