We were recently asked this question about an upcoming stock split and I thought many of you might be interested in the answer since you may have stocks that announce a split at some point.
Question:
"Does Bivio automatically handle stock splits? If
not, I assume that I should use the Stock Split transaction for this
stock. If I use the Stock Split transaction, do I use the distribution
date (around June 15 for IDXX, see below) as the transaction date?
Should I wait for the distribution date before entering the Stock Split
transaction?"
Here is the particular split announcement this question referred to:
"WESTBROOK, Maine, May 6, 2015 -- IDEXX Laboratories,
Inc. (NASDAQ: IDXX) today announced that its Board of Directors approved
a two-for-one split of its outstanding common stock. The stock split
will be effected in the form of a 100% common stock dividend.
Stockholders of record as of the close of business on May 18, 2015 will
be issued one additional share for each share of common stock held on
such date. The additional shares of common stock will be distributed on
or about June 15, 2015. It is anticipated that the Company's common
stock will begin trading on a post-split basis on the business day
following the distribution date. The stock split will double the number
of outstanding common shares to approximately 94 million based on the
number of shares outstanding as of April 30, 2015." Answer: You don't enter a split until it happens. The date of the split entry is the date that the shares begin trading on a split adjusted basis. If, as in this example, the shares are distributed after the close of the market on Friday June 15, this will be Monday June 18.
We enter splits automatically if we receive the information in the file from your broker that is read by AccountSync. If that information doesn't come through and the date has passed, you can either enter it using the split button on the Accounting>Investments page or email us in support and we'll be glad to enter it for you. If you didn't know a split was coming, you'll catch it quickly when you check the number of shares each month against what your broker shows. It is important to get the entry made in a timely manner.
If you receive fractional shares in a split, they will be sold and you'll receive "Cash in lieu" You'll also need an entry to record this sale of the number of fractional shares for the cash in lieu amount you received. Sometimes this doesn't come through for several weeks after the split.
Again, if it isn't entered by AccountSync automatically, you'll pick it up when you check cash balances and number of shares for the month. We'll be glad to help you get it entered if you don't know how to do it. We'd also recommend that you make sure that the cost basis of each of your lots agrees with your broker after the split entries are made. This is especially critical if you are doing automatic dividend reinvesting or haven't set FIFO as your default lot selection method for a sale.
We keep a list of links to company documents describing the tax implications of different reorganizations here: Reorganization Cost Basis Adjustments Since reorganizations affect cost basis and also the value of your club, it is important to get them entered correctly and in a timely manner. That is a big benefit of using bivio for your club accounting. If you don't know how to make the entries, we're glad to make them for you.
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