We've been getting a number of questions from TradeLog users about how to adjust their trade history for the 2 for 1 Google (GOOG) stock split that occurred in April. This post will explain some general instructions and details for this corporate action.
First, while many sources refer to this corporate action as a "stock split", that may be misleading. The proper term is a stock dividend. And this is what you will find referenced in the Form 8937 filing to the IRS outlining the details of the organizational action. In most stock dividends, you receive shares of the same stock, and this is generally what we think of as a stock split. But in this situation, Google issued a dividend of shares of a new class of stock.
- Ex-(stock) dividend date is April 3, 2014.
- Google issued one share of new class C stock for every one share of class A stock owned.
- On April 3rd the new class C stock issued began trading under the symbol GOOG, and the class A stock traded under a new symbol of GOOGL.
- Original cost basis of shares owned would be allocated 49.92% to GOOG and 50.08% to GOOGL.
When a stock dividend occurs, the shares received are considered to have the same holding period of the shares that were originally owned. The cost basis of the new shares received is allocated from the original cost basis of the shares owned. The amount of the allocation is calculated based on the closing prices of new shares in relation to the old shares on the first day of trading. Google has provided the allocation amounts in the Form 8937 they sent to the IRS.
Because of the complex nature of this adjustment there is no fully-automated way to adjust in TradeLog. So we are going to take you through the key steps with a few examples.
Start By Importing Your Trade History Into TradeLog
We recommend importing with the last date of 4/2/2014. If you have already imported past that date, it's okay – but you may have negative share errors involving GOOG or GOOGL which will be fixed once you make these adjustments.
Now would also be a good time to save a back-up copy of your file in case you make a mistake and need to later restore the file. Click here for instructions on backing up your files.
Find Out What Positions Were Open
Do this by checking for open positions as of 4/2/2014. Whatever you held open in GOOG as of the end of that day is what will be adjusted going into 4/3/2014 (the ex-dividend date).
Adjusting Stock Positions:
If you have shares of GOOG open as of the end of 4/2/2014, then you'll need to follow the instructions below to adjust these shares for the stock dividend.
Note: In our examples we'll use long positions. However, if you have short sales for GOOG open as of 4/2/2014, these will be adjusted using the same instructions.
- From the open positions window you can double-click on the GOOG trade that is open as of 4/2/2014. This will isolate all the records associated with that trade.
- Before continuing, we suggest turning on the Notes column in TradeLog, this will be helpful in making adjustments. Go to the View menu and check the option to Display Notes.
- Next, go to the Edit menu and choose the function Adjust for Stock Split (or click Ctrl+S on your keyboard).
- The Adjust for Stock Split dialog box will open. Enter ticker GOOG, the ratio is 2 for 1 and the split date is 4/02/2014. It is important that you enter the date as 4/02/2014, because we are splitting shares open as of that date!
Click OK when finished.
- Notice that TradeLog has adjusted all the positions that were open, doubling the number of shares and splitting the price in half. This is a basic split adjustment – but we are not done!
- You should now identify the open positions that were adjusted. We suggest finding the oldest position that was adjusted and select that record.
TIP: Notice the drastic price differences, that should help you identify the adjusted positions. In our example below we have highlighted the three positions that were adjusted.
- If you have more than one record, we suggest making notations using the Notes column, this will make it easier as we proceed through further adjustments.
- Do this: select the first record and hit the F2 key on your keyboard to enter the editing mode (or you can right-click on the record and select Edit Single Record).
- In the Notes column, type "adj". Then select the next record that was adjusted and do the same. Once you have entered a note for all the records adjusted, hit the Enter key on your keyboard TWICE to exit the editing and save the records.
Adjust for the new shares received:
- To complete the next steps, we recommend using the calculator we prepared. This is an excel spreadsheet you can download by clicking here. You will enter details for each record that is being adjusted, and the calculator will determine the resulting positions with cost basis allocated based on the ratio listed earlier.
- Select the first record to adjust, we suggest you start with the oldest record. If you added the "adj" notation, then select the oldest one first in your trade history.
Then click on the Insert Trade button on the toolbar.
- TradeLog will insert a new trade record above the record you had selected.Enter the details for the GOOGL position. (If you used the calculator tool we provided, the details will be from that tool.)
- Once you have keyed in the new record, hit the Enter key on your keyboard twice to save the record.
When prompted if you want to insert another record choose NO.
- Next, re-select the GOOG record – the same record you selected in Step 9 above.
- Hit the F2 key on your keyboard to edit this record. You will edit the GOOG record to use the new details provided by the calculator. Make sure to change the number of Sh(ares), the Price, and the Comm(ission) fields.
TIP: We also removed the "adj" notation in the Notes column as we completed this step. This way it is easy to tell which records still need to be adjusted.
- When finished editing, hit the Enter key on your keyboard twice to save the records.
- Repeat steps 8 through 13 for any other positions that need to be edited.
- When finished with the adjustments you should have positions for the same number of shares for GOOG and GOOGL.
Adjusting Option Positions:
Option positions for GOOG that are held open as of the dividend date are tricky. And there is various information regarding adjustments and reporting.
Here is what we know:
- GOOG options that are still open as of the end of 4/2/2014 will be adjusted as non-standard deliverables. This means, if exercised, the option will deliver one share of GOOG and one share of GOOGL at the contracted strike price.
- The multiplier and strike price of your options would not change.
- The ticker symbol for the contract will change in your broker's reporting beginning 4/3/2014.
- According to the CBOE and the OCC, the new symbol for standard GOOG options would be adjusted to GOLG1; and for mini options, GOLG8.
However, it's important to note that we have seen conflicting information from brokers. Some brokers may report the closing position for these options as GOOGL, GOLG, or something else. We cannot say definitively how each broker has reported this.
This is what you may need to do:
If you had options in GOOG open as of 4/2/2014, check your trade history and records to confirm if the options were closed, exercised or expired.
- If they expired, then you should not need to make any adjustments – simply use the Expire Options function in TradeLog to create the expiration record.
- If they were closed, then you will need to identify the closing record imported from your broker. If the closing record was not matched to the open position, then you may
need to edit the opening record to change the underlying ticker symbol to match the close position.
Example: Notice in this example below that the close position for the option has the ticker symbol GOLG – this is a mini-option with a multiplier of 10.
Here is how to make the adjustment:
- Select the original opening trade, then hit the F2 key on your keyboard to edit the record.
- Change the underlying ticker symbol to match the close record.
- Hit the Enter key on your keyboard twice to save the record. TradeLog should match the open and close positions and calculate a Profit/Loss
- If your position was exercised, you will not be able to use the Exercise/Assign function in TradeLog to automatically adjust the positions. We recommend submitting a support request and our support team can provide more specific instructions. Click here for instructions on submitting your support request.
Questions or Problems?
Contact our support team if you have questions or problems. The best way to submit your support request is directly from the software. Simply open your TradeLog file, click on the Help menu, choose Send Files to Support. Fill out the details and submit. This way we receive your data file and we can see the exact details involved in your case. Click here for step-by-step instructions on sending files.
Important: if you do not send your data file with your support request, we will be limited in the quality and speed of the support we can provide.