Spin-Off¶
A spin-off is a corporate action in which a parent company distributes shares of a subsidiary to its existing shareholders on a pro-rata basis, creating an independent, publicly traded company. No cash changes hands; shareholders simply end up holding two securities — the (now smaller) parent and the newly independent entity, commonly called SpinCo. Spin-offs are typically structured as tax-free distributions under IRC Section 355.
HOW IT WORKS¶
The board announces the spin-off alongside a distribution ratio and record date. Shareholders on record receive SpinCo shares in proportion to their parent holdings — for example, one SpinCo share for every four parent shares held. SpinCo may trade on a when-issued basis before the formal distribution date, after which regular-way trading begins. Cost basis is allocated between the parent and SpinCo in proportion to their relative fair market values on the distribution date. The parent's share price adjusts mechanically on the ex-date to reflect the distributed value; no aggregate wealth is created or destroyed at separation.
IN TAPEBOARD¶
Tapeboard flags upcoming spin-offs in the Corporate Actions feed, including the distribution ratio, record date, and ex-date. The SpinCo entity appears in your watchlist automatically once when-issued trading opens, letting you track pre-distribution price discovery alongside the parent. Cost basis impact is surfaced in the Position Detail view using day-one closing prices to calculate the parent/SpinCo basis split. The Special Situations screener lets you filter recently distributed spin-offs by days since separation, market cap, and debt load — useful for identifying forced-selling windows in the first days of regular-way trading.