Gold Resource Corp (GORO)

[nsomniyak]

As a data point, Schwab seems to be figuring things much the same way as you did. My GORO shares now show a basis that has been adjusted downward and the adjustment amount now shows as the basis for my Fortitude shares (which as yet I can not trade).

The figures are not exact due to rounding, but they are very close. Lot by lot, 70% of my original basis stayed in GORO, and 30% went over to Fortitude. I now have separate lots of Fortitude, purchase date by purchase date, corresponding to my original GORO lots and their purchase dates. I think this is good, as by the time Fortitude ever trades I think some of those lots will be long term.

While the basis split is only relevant to gains and losses and therefore taxes, it looks like 70/30 is a pretty good place to start. Of course, the whole point of the spinoff was to let the two pieces find their own audiences and follow their own trajectories, so I would not expect the 70/30 ratio to be consistent as the ratio of value between the two.

I suspect that 70/30 ratio Schwab has operationally applied to distribute the basis of my shares is more meaningful than the 1 for 3.5 spinoff ratio. The spinoff ratio could have been anything - it had nothing to do with the relative value of the pieces but rather was chosen solely to get what management thought was a good initial share count for Fortitude.