# Kimberly-Clark spin off



## gibor365 (Apr 1, 2011)

What do you think about upcoming KMB spin off? Would it be beneficial for stock holders?


----------



## Xoron (Jun 22, 2010)

I love spinoffs. Thanks for the heads up, time to look up the filings and see what's up


----------



## gibor365 (Apr 1, 2011)

Xoron said:


> I love spinoffs. Thanks for the heads up, time to look up the filings and see what's up


I like it too  So far I had 2 spinoffs , ABT abd COP and both workes just fine.... I hold small position in KMB and thinking to add just before it... I've heard taht spinoff will be on Nov 1, but still don't have any details, how many shares I gonna get (I think new spinoff ticker is HYH), what is dividend policy on a new company etc


----------



## Xoron (Jun 22, 2010)

gibor said:


> I like it too  So far I had 2 spinoffs , ABT abd COP and both workes just fine.... I hold small position in KMB and thinking to add just before it... I've heard taht spinoff will be on Nov 1, but still don't have any details, how many shares I gonna get (I think new spinoff ticker is HYH), what is dividend policy on a new company etc


That's where you need to dig into the financials and the SEC filings. Only way to get a handle on what exactly is happening.


----------



## gibor365 (Apr 1, 2011)

Just checked KMB website, still no new spin off information.... On the other hand, if those news will be good (and I hope they will), stock price will jump.... today negotiated some free trades with CIBC, may buy some small trenches....


----------



## Xoron (Jun 22, 2010)

Without more details (ratio of parent to spin off shares, market cap of the spinco, debt levels of the spin co), I'm more inclined to wait.

The spinoff details are sometimes disclosed quite late in the game, so buying KC shares right now is a little early for me. I'll either wait until a week or so before the spinoff date, or sometime after the spinoff happens. Its an interesting area to play in, but requires some digging to see whats really going on.


----------



## warp (Sep 4, 2010)

Just a note:

US spinoffs can cause some big tax headaches, if the stock is held in a cash account. I speak from personal experience because I have lived through a few during the last few years.

The "value" of the US spinoff may be coded as a taxabe US dividend, and included as such on your T5 at years end for tax reporting purposes. You will, in effect, be paying tax twice.

In any case, in the interest of being helpfull, carefully check your US (foreign income) T5's, AND your year end summary from your broker. You will clearly be able to see how the spin-off value is being treated, and will probably see a very large US dividend amount on your summary.

If the spinoff was/is being treated as a taxable dividend, you will have to request and complete a "SECTION 86.1" form, from CRA. This will allow you to deduct this income from your T5, and you will have to do a calculation to assign new cost values for your new spinoff shares, and the value of the stock you held before the spinoff.

You MUST file a paper return to do this. For more info go to CRA website, and put section 86.1 in the search bar.


----------



## warp (Sep 4, 2010)

By the way, this has caused many questions by Canadian stockholders of US companies, so many US companies now have helpful info for Canadian investors, WITH the paperwork you will need to fill out right on their websites, ( in the investor sections).
This can be very helpful, and useful, and KMB may have this info on their site too, ( or you can call their 1-800 numbers and ask, as I have done in the past)

There is no problem for US stockholders, because in the US, these spinoffs are almost always considered non-taxable events....( not so here in Canada)


----------



## humble_pie (Jun 7, 2009)

warp said:


> Just a note:
> 
> US spinoffs can cause some big tax headaches, if the stock is held in a cash account ... If the spinoff was/is being treated as a taxable dividend, you will have to request and complete a "SECTION 86.1" form, from CRA. This will allow you to deduct this income from your T5, and you will have to do a calculation to assign new cost values for your new spinoff shares, and the value of the stock you held before the spinoff.
> 
> You MUST file a paper return to do this. For more info go to CRA website, and put section 86.1 in the search bar.



oh the horror.

wouldn't it be much easier to just sell the stock before the record date of the taxable dividend? that way one would capture the gains as favourably-taxed plain capital gains ... none of this unspeakable terror about having to fool around with form 86.1 & comply with CRA monster recalculation regs ...


----------



## gibor365 (Apr 1, 2011)

> You MUST file a paper return to do this. For more info go to CRA website, and put section 86.1 in the search bar.


 Why on the earth i'd hold US stock in non-reg?!


----------



## Xoron (Jun 22, 2010)

humble_pie said:


> oh the horror.
> 
> wouldn't it be much easier to just sell the stock before the record date of the taxable dividend? that way one would capture the gains as favourably-taxed plain capital gains ... none of this unspeakable terror about having to fool around with form 86.1 & comply with CRA monster recalculation regs ...


Or just hold in a TFSA or RRSP. Or buy after the spinoff (which is what I like to do)

There is more than one way to get around the tax complication.


----------



## warp (Sep 4, 2010)

humble_pie said:


> oh the horror.
> 
> wouldn't it be much easier to just sell the stock before the record date of the taxable dividend? that way one would capture the gains as favourably-taxed plain capital gains ... none of this unspeakable terror about having to fool around with form 86.1 & comply with CRA monster recalculation regs ...


Yes Humble, in some instances it would be better to just sell before the spinoff.
But there are reasons one may not wish to sell, such as when you would prefer not to take a capital gain.
Also if you like the stock, and the spinoff stock,,you would have to re-buy. This creates 3 commissions, and you have to pay a higher, ( or lower price) , after the spinoff.


----------



## gibor365 (Apr 1, 2011)

Anyone is holding KMB here?
On Nov 1 they spin off HYH (1 share for 8 KMB shares) , but i still don't see it on my account....
btw, didn't really liked this spin off... considering price of HYH and my pretty moderate KMB position, I will get just a few HYH shares for total of couple of hundred $ ...


----------



## gimme_divies (Feb 12, 2011)

I'm a holder and no sign of HYH for me either.


----------



## Xoron (Jun 22, 2010)

gimme_divies said:


> I'm a holder and no sign of HYH for me either.


It does typically take a while for the spun off shares to show up in your account. I've been owners of pre-spunoff stocks in the past, but unfortunately, I can't remember exactly how long it took to get the spinoff shares. I remember being annoyed by the delay so it must have been more than a few trading days.


----------



## gimme_divies (Feb 12, 2011)

I got my whopping 11 shares of HYH this morning. A beautiful addition on top of the incredible 33 shares of CDK I got a few weeks ago from the ADP spinoff.


----------



## gibor365 (Apr 1, 2011)

I got HYH today too .... but even less than your "whopping 11 shares "  Still didn't get Cash for partial shares sale ....have 0.375 of them ...
btw, what is your plan for HYH.... ? they don't even pay dividends :upset: Was thinking to sell and buy couple of more KMB shares, but don't want to pay 2 trading fees


----------



## gimme_divies (Feb 12, 2011)

I saw no point in holding on to so few shares and sold them this morning. I ended up using the proceeds to top up a position in VIVO I initiated yesterday.


----------



## warp (Sep 4, 2010)

I will repeat, as a way to help: 

If any of you own these KMB in cash accounts, the spinoff value will most probably be treated as a Taxable US Dividend, here in Canada.

This amount will be added to your T5 as "foreign income", and will be taxable at your highest marginal rate, ( like interest).

To get around this, search "SECTION 86.1", on the CRA website. It will allow you to write a letter to the CRA to take this income right off your T5.
You then would have to figure out new a cost basis for your KMB shares, and any new spinoff shares you got.
If you don't do this you may be taxed twice on the same money.

Good luck.


----------



## gibor365 (Apr 1, 2011)

Depends how much is it.... if it's couple of hundreds $ , just ignore it and don't add anywhere... pretty sure CRA won't notice it... in any case i hold everything in registered account ...  will hold equities in registered only if we get exemptions on big amounts like it's done in UK


----------

