Spin-off of Flowers Foods
A question was raised in another forum about the recent spin-off of Flowers Foods from Flowers Industries.
Flowers Foods was recently spun off from Flowers Industries and a subsequent merger of Flowers Industries with a subsidiary of Kellogg. Our investment club owned 35 shares of Flowers Industries for which we received $12.50 per share as a cash payment with a $15.00 brokerage fee and we received 7 shares of the new Flowers Foods company.

This is not a typical spin off, in that it does not qualify for tax-free treatment. Gain or loss will be recognized on the difference between tax basis of the original Flowers Industries shares and the consideration received. This consideration will consist of cash of $12.50 per share plus the fair market value of the new Flowers Foods shares.
From the Flowers Foods press release on 3/29/01.....
For purposes of the spin-off, Flowers Foods believes the fair market value of the common stock of Flowers Foods is $20.52 per share, determined by averaging the high and low reported trading prices of Flowers Foods common stock on the first day of regular trading on the NYSE.
Using the above facts, the total consideration would be computed as follows:
Cash received 35 shs times $12.50                $437.50
Flower Foods shares received 7 @ $20.52    143.64
    Total consideration                                       $581.14
In either bivio or NCA, you should record a sale of the 35 shares of Flowers Industries for a total amount of $581.14.
After recording the above sale, you should enter a purchase of 7 shares of Flowers Foods [FLO] for a total amount of $143.64.
As for the brokerage fee of $15, it is not clear to me if this is a commission on the purchase of the new shares, commission on the sale of the old, or just a general fee. In the absence of any further information, I would record this as a commission against the sale.
The holding period of the new stock will start with the date of this transaction, presumably 3/28/01.
Rip West
Saint Paul, MN