On March 12, 2009, Time Warner, Inc. (stock symbol TWX) issued spin-off shares in Time Warner Cable Inc. (stock symbol TWC). The spinoff ratio was .083670 shares of TWC for each share of TWX. The shares were held by an agent until March 27, 2009, when they were distributed to TWX owners.
The spin-off distribution was tax-free. Your former cost basis for TWX can be allocated as follows (based on relative market values at the opening of trading on 3/13/2009):
Time Warner Cable (TWC) 24.7829% Time Warner Inc (TWX) 75.2171% Total 100.0000%
Click on the spinoff calculator image to the right for an easy way to compute your cost basis allocation. Just choose TWC from the drop-down menu.
Spinoff Calculator
A complicating factor with this spinoff was the reverse split of 1 share for every 3 shares owned that occurred in both Time Warner Inc (TWX) and Time Warner Cable (TWC). Holders of TWX are likely to received TWO cash in lieu of fractional share payments, one for the TWC spinoff fractional share and one for the reverse split fractional share.
The TWX reverse split occurred on March 27, 2009, AFTER the spinoff date. Apply the spinoff cost basis factors shown above before the reverse split calculation.
The TWC reverse split occurred on March 12, 2009, BEFORE the spinoff. It applies only to investors who already owned TWC before the spinoff.
Click on the Stock Split Calculator image to the right for an easy way to compute your new cost basis per share after the reverse splits. It will also calculate your gain or loss on the cash payment you will receive in lieu of fractional shares.
Stock Split Calculator for Cash in Lieu Payments
Time Warner Cable Partial Redemption Merger
On May 18, 2016, Time Warner Cable Inc merged into Charter Communications Inc using a cash to boot merger with an unusual tax opinion. Instead of the normal cash to boot (Section 368(a) reorganization) rules, the merger was classified as a partial redemption.
Holders were offered two options:
A. $100 cash and 0.4891 CHTR shares, or
B. $115 cash plus 0.4125 CHTR shares.
The cash amount was deemed a redemption of a portion of the shares and carryover basis applied to the remaining stock.. This unusual treatment required us to build a new special purpose calculator for our users. Click on the picture of the calculator to the right to use it.
