Time Warner Inc. has announced the date for the dividend spin off of its internet entity AOL Inc. The dividend spin off of AOL that is scheduled for December 9th, 2009 will formally separate the entities both legally and structurally. The date for the separation was decided unanimously by the board of directors of Time Warner.

The shareholders of Time Warner will receive one share each of AOL for every eleven Time Warner shares they hold. The dividend distribution for AOL will be counted on a pro rata basis and Time Warner shareholders recorded as of November 27, 2009 will be eligible for the distribution of AOL shares.

The AOL fractional shares of its common stocks however, haven’t been slated for distribution to the shareholders. Instead, such common stocks will be valued and then sold in the open market, after which the amount collected will be distributed to the shareholders in cash form, again on a pro rata basis. The current Time Warner shareholders will not be required to make any payments or enroll in paperwork, as Time Warner has decided to update their book entry account, that will depict their ownership of AOL common stocks. In other cases, the brokerage accounts of the shareholders will be credited with the amount gathered after the sales of the AOL common stocks.

Another good news for the shareholders is that, the spin off of the AOL shares has been deemed tax-free for such investors of Time Warner. However, the amount credited to the shareholders after the sale of AOL’s fractional shares will be taxable.

Via Yahoo! Finance.