BBL’s spin-off and cost basis???

A question rather than a post…

Earlier this month, I received shares of South32 after its spin-off from BBL. But I noticed that cost basis of BBL hasn’t changed. Typically in other spin-offs that happened before (like COP and PSX), the cost basis of the parent stock was automatically changed once the new stock was awarded. But that didn’t happen with BBL. Is it because this is an ADR or is it based on the brokerage? I hold BBL’s shares at Sharebuilder, where as my COP was held at Scottrade.

Any thoughts?

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11 thoughts on “BBL’s spin-off and cost basis???

  1. I was wondering this as well as I am not sure how my cost basis is calculated for SOUHY if BBL did not change.

    Also, why am I charged a fee for BBL?

    FEF PASS THROUGH SVC CHARGE:BBL BBL -$0.47

  2. Hi there DGJ,

    My broker in Italy lowered the cost base of the stock, not sure if that was done correctly but I am inquiring about the calculation that they put in place…

      • Ciao DGJ,
        Sure! When they reply to me… I am in Toronto right now, so I cannot call them up, but when I get the news I’ll let you know. From a first look it seems that they lowered of around 1 pound, that it was the value of S32 at the beginning of its trading history… But I’ll be more precise later,

        Ciao ciao

        Stalflare

  3. I live in Canada and my brokerage firm has not adjusted my cost basis for BBL. I hold the shares in a TFSA so it doesn’t matter as there are no tax implications. I had a $2.50 fee for ‘deregistration’ of BBL. I had to call them for another reason and inquired about the fee. The rep couldn’t explain it and reimbursed it.

    And my brokerage has established my cost basis of SOUHY at $8.09US per share.

  4. Hi DGJ,
    It’s the same for me with my BBL shares at Sharebuilder – the cost-basis of BBL is unchanged, but the cost-basis of South32 is Zero, so overall the tax effect is the same I think. If the BBL cost-basis was reduced, then the cost-basis of SOUHY should be non-zero.

    It’s the same for me with KMB and their HYH spinoff. My HYH stock has a zero cost-basis. I think the companies get to decide what happens to the cost-basis and informs the brokers how to handle it.

    The ADR pass-through charge is normal although it’s sometimes taken out of the dividend payments rather than being charged separately.

    This capital one investing link mentions both the spin-off case and the ADR fees:

    Best wishes,
    -DL

  5. Hi DGJ, aussie accountant here. For Australian holdings of BHP the way to calculate the cost base for South32 spinoff units is 7.1% of your original BHP cost, and your BHP cost then is reduced by this amount. We had a client holding the BBL ADR in USD and we treated it the same way. I know very little about foreign tax, but this one way you could do it. http://www.bhpbilliton.com/~/media/bhp/documents/investors/news/2015/150610_demergerofsouth32australiantaxationinformation.pdf?la=en

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