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Posted by Ira Smilovitz on December 13, 2006, 8:38 pm
Please log in for more thread options Too bad the advice you were given was wrong.
The ACV spinoff is a very complicated transaction, the full impact of which
won't be known until early 2008, yes, 2008.
The $25 dividend must be entered as a dividend from Sally Beauty as that is
how it will be reported to the IRS in January 2007. However, sometime in
late 2007 or early 2008, most, if not all, of that dividend will be
reclassified as a return of capital. Some of this may even become a capital
gain. It is unclear at this date how much of this reclassification will be a
return of capital for ACV and how much for SBH.
If you sell any of your ACV or SBH shares before the final determination of
the tax status of the $25 dividend, you won't know the cost basis of those
shares.
Finally, the $25 dividend may be considered an "extraordinary" dividend
under the tax code which will have additional implications on the tax
consequences associated with the sale of any shares.
As if all of this weren't bad enough, it is certain that you will have to
file amended tax returns for 2006 and perhaps even 2007 before this is all
through.
Ira Smilovitz
> Thanks everyone for the help. Got it to work.
>
> ws
>
>
>> Alberto-Culver (ACV) did 2 things in one day. On 17 November they:
>> 1) Gave shareholders a special $25/share dividend, and
>> 2) Spun off their Sally Beauty Holdings (SBH) on a 1-for-1 basis to
>> shareholders.
>>
>> I'm trying to figure out how to put this into Quicken. Currently using Q
>> Deluxe 2006. Ameritrade downloaded a bunch of dividend and removed
>> shares and bought shares transactions and such and labelled them all
>> "Reorganization ...", all of which are not correct (they effectively
>> change my cost basis AND my purchase date). So I've deleted most of
>> them. I've looked thru a bunch of old "spin-off" suggestions here in this
>> newsgroup, but it seems that nobody's ever given a big dividend in
>> addition to spin-off shares at the same time. This complicates matters a
>> bit.
>>
>> Per ACV's website, I am supposed to:
>> 1) Delete the $25/share from my total cost basis (which is $44.36 on 1
>> February 2006). So I'm left with $44.36 - $25 = $19.36/share.
>> 2) My ACV cost basis is now 73.26% of this. So $19.36 x .7326 = $14.18.
>> 3) My SBH cost basis is 26.74%, so I'm now at $19.36 x .2674 = $5.18.
>>
>> Doing steps 2 and 3 are easy in Quicken using the 'Corporate Spin-Off'
>> option. However, somehow I have to first tell Quicken to lower my
>> initial ACV cost basis by $25/share, and then do the spin-off
>> calculations. Any thoughts?
>>
>> Thanks in advance for the help.
>> ws
>>
>
>
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