I know there has been a lot of discussion about folks selling off their PSX shares after today.
It shouldn't take COP long to get back into the $70's in my opinion. And the PSX shares are just sitting there in our accounts, and there is a dividend from owning the stock. So what I'm asking is, is there any reason not to just keep the PSX shares that have fallen in our laps, basically? I surely don't think the stock will stay in the $30's for the long haul, so over time surely it'll go up.
Any insight is welcome. Thanks.
I had planned on selling my PSX but my accountant talked me out of it. She said that since there is no cost basis, I am liable for tax on 100% of this income. I'm in a 25% tax bracket and I don't feel like giving Uncle Sam 25% of my profit.
Twopistol, you post, "I'm in a 25% tax bracket and I don't feel like giving Uncle Sam 25% of my profit"
First of all you seem to be too ignorant to be investing in the stock market. The current maximum capital gains tax rate for the year 2012 is 15%. Secondly, you and your accountant are completely lost in the tax ramifications of selling your PSX shares. Your cost basis in PSX is not zero and if you had sold your PSX today, you would have taken a loss for tax purposes.
"my accountant talked me out of it. She said that since there is no cost basis, I am liable for tax on 100% of this income."
You need to fire your accountant, she doesn't have a clue what she is talking about. "No cost basis" is not the same as "zero cost basis". Your accountant is an idiot.
The "cost basis" for your PSX shares would be the spinoff pps of $34.05. Tell your accountant to go back to school. And if you are paying this particular accountant your money, in any form and for any reason, then you are an idiot also.
I have already dumped my PSX shares that I obtained through the spinoff from COP. I have reinvested the proceeds of the PSX sales back into COP shares.
There are reasons why I pursued this strategy.
1. COP pays about 4.5% divvys almost double PSX's payout.
2. COP spunoff PSX because it was deadweight to it's profit potential. Refineries are cyclical, non growth, and over regulated by the EPA. If COP didn't want PSX, why should I?
PSX is NOT just refining.
PSX has "Midstream" which takes nat gas and fractionates it into its individual components, which includes ethane and propane.
PSX also has CP Chemical which makes ethylene and propylene out of the CHEAP ethane and propane they produce internally. They then make polyethlyene and polypropylene polymer (plastic) from the ethylene and propylene....starting to get the picture!
PSX also got transportation (pipelines) too.
Some folks on this site say that more $$ is to be made in finding oil than refining it…but I tend to think I will hold onto PSX. We can’t use the oil until it is refined. They will make $$ refining and selling it. I don’t see us using any less oil in the future, and the dividend is nice. PSX does not have a message board yet, but hopefully that will be added soon. I have a question for anyone…sorry in advance if it is stupid…does anyone know about natural gas…does it need any refining before it is used? PSX is refining oil and Nat gas correct?
Nat gas never comes out of the ground ready to use. It comes out with oil, methane, propane, butane, and other stuff mixed in. It also doesn't need to be refined like oil, but processed to filter and separate it from water vapor and other useable contaminates. Mostly this has to be done so it meets quality standards set by pipeline operators to meet their "dry natural gas " standards.