Process a corporate spin-off that is partially funded by a Dividend payment

Legacy KB ID: 4808

Question

A company I own shares in has informed me that I have been assigned shares in a new company being created out of the current company.  They have given me a statement of how many shares in the new company I have been assigned, a capital reduction in the original company and a special dividend.  I have not received any cash.  How do I process this in Quicken?

Answer

This type of transaction is known as a corporate spin-off – a new company is created out of some of the assets of an original company. 

It is usually achieved by a reduction in the capital base of the original company for the same amount as the value of the new company.  ReckonAccounts Personal (Quicken) has a transaction type for this event – Corporate Securities spin-off. 

More complex type of spin-offs are possible – like a recent Woolworths spinoff - that involved using a special dividend to fund the new company.  The Corporate Securities Spin-off cannot be used for this type of event. 

Click this link:  https://library.reckon.com.au/library/pdf/rap_Corporate Spin-off with Dividend.pdffor a guide on handling a corporate spin-off that uses a dividend.