In addition to part 1, in which JCI and TYC merged, I am trying to figure out the tax consequences of JCI's spinoff of Adient (ADNT).
JCI spun off 0.1 share of ADNT for each share of "new" (post-Tyco merger) JCI stock owned. That part is the simple part... but how can I figure out the tax consequences of this spinoff and how to apportion cost basis between ADNT and JCI?
JCI published a dumbed-down PDF presentation that gives no information about tax consequences other than that it is a taxable event.
I found another website for an investor club that suggests that the way to handle this event is roughly as follows:
- Taxable dividend value of spinoff = (# of shares in new JCI) * 0.1 * $45.51 (allegedly the closing price of ADNT on first day of trading)
- Cost basis of ADNT owned would be # of ADNT shares owned * $45.51
so if I own 113 shares of new JCI, then I could calculate 113*0.1*$45.51 = $514.26, and then my cost basis of the 11 remaining ADNT shares as $500.61 (with $13.65 cash-in-lieu for the 0.3 shares)
Is this correct? If so, how can I verify (or correct) the $45.51? My brokerage shows that I received $13.13 cash-in-lieu for my 0.3 shares at a price of $43.77.