What was the distribution?
On November 3, 2021, International Business Machines Corporation (“IBM” or “we”) distributed 80.1% of its interest in Kyndryl Holdings, Inc. (“Kyndryl”) to holders of its common stock. Holders of IBM common stock received one share of Kyndryl common stock for every five shares of IBM common stock held as of the close of business on the record date, October 25, 2021.
When was the distribution?
The distribution was effective as of 5:00 pm, Eastern time, on November 3, 2021.
Did the number of IBM shares I own change as a result of the distribution?
The transaction had no impact on the number of shares of IBM common stock that you own. Unless you sold or otherwise disposed of your IBM shares, your balance before and after the transaction remained the same.
How did IBM distribute shares of Kyndryl common stock?
IBM distributed to its stockholders, as a pro rata dividend, one share of Kyndryl common stock for every five shares of IBM common stock outstanding as of the record date of the distribution. Prior to the distribution, IBM delivered 80.1% of the issued and outstanding shares of Kyndryl common stock to the distribution agent, Computershare Trust Company, N.A. (“Computershare”). Computershare was the distribution agent in connection with the distribution and is the transfer agent and registrar for both IBM and Kyndryl.
If you owned IBM common stock as of the close of business on October 25, 2021, the shares of Kyndryl common stock that you were entitled to receive in the distribution were issued as follows:
- Registered stockholders. If you held your shares of IBM common stock with Computershare as of the record date, any whole shares of Kyndryl common stock that you were entitled to receive have been issued to a new account at Computershare in Direct Registration (book-entry) form. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to stockholders, as is the case in the distribution. Commencing shortly after the distribution date, Computershare will mail a statement of holdings to all new Kyndryl account holders. The statement of holdings indicates the number of whole shares of Kyndryl common stock that have been registered in book-entry form in your name. We expect it may take up to two weeks after the distribution date to complete the distribution of the shares and mail statements of holdings to all registered stockholders.
- “Street name” or beneficial stockholders. If you held your shares of IBM common stock beneficially through a bank, broker or other nominee as of the record date, the bank, broker or other nominee holds the shares in “street name” and has recorded your ownership on its books. In this case, your bank, broker or other nominee has credited your account with the whole shares of Kyndryl common stock that you were entitled to receive in the distribution. We encourage you to contact your bank, broker or other nominee if you have any questions concerning the mechanics of having shares held in “street name".
How does Kyndryl common stock trade?
Kyndryl Holdings, Inc. common stock trades on the New York Stock Exchange under the symbol "KD".
Is this a taxable transaction?
We expect that the distribution of Kyndryl common stock will be tax-free to holders of IBM common stock for U.S. federal income tax purposes, except for cash that stockholders may receive (if any) in lieu of a fractional share. Foreign, as well as U.S. Stockholders, should contact their own tax advisor with respect to the U.S. federal, state and local, and foreign tax consequences of the distribution.
How is the cost basis of my IBM shares affected by this distribution, and what is the cost basis of my Kyndryl shares?
IRS Form 8937, Report of Organizational Actions Affecting Basis of Securities, attached below, provides information in regards to how the distribution affects the basis of your IBM shares as well as how to determine the basis in your Kyndryl shares.