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Phillips 66 Message Board

  • glbinvestor glbinvestor May 2, 2012 9:02 PM Flag

    Cost base calculation for COP and PSX

    Anyone knows how to calculate cost base for COP and PSX for tax purpose when selling after the split?

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    • FYI: For those of you who received PSX shares in the spinoff and who have those shares in a Scottrade account, then Scottrade has automatically calculated the cost basis of the PSX shares. I suspect that other brokerages have done something similar. You don't have to calculate the cost basis of your COP/PSX shares, it's already been done for you. You can check your Scottrade account for the basis, whether or not you sold your PSX shares already.

      1. Login to Scottrade
      2. Select "My Account"
      3. Select "Gain/Loss & Tax Center" link in the left menu
      4. Scroll over "Gain/Loss Reports"
      a. If you have already sold your PSX select "Current Year
      Realized Gain/Loss"
      b. If you haven't sold your PSX select "Unrealized Gain Loss"

      • 1 Reply to invest_2_bsecure
      • I believe this is a dead horse. It is what 2 weeks or so since the spin. If you have not figured out how to do your cost basis,you never will or you may not be interested, or you were never good at math. The information has been posted and discussed over and over and over and over. Enough already! How many times do you need to hear the instruction's? They are NOT CHANGING!

    • Answer from the company:

      How do I determine the cost basis for my ConocoPhillips shares (COP) and Phillips 66 shares (PSX)?
      As described in the IRS Form 8937 (which will be linked here shortly), for U.S. tax purposes, the allocation of tax basis between shares of COP common stock and PSX common stock is based on their relative fair market values (FMV) at the time of the distribution. There are many potential ways to determine the FMV of COP and PSX common stock. One approach may be to use the unadjusted averages of the high and low trading prices of COP and PSX common stock on the NYSE on the trading day after the distribution. Such averages were $56.10 for COP and $33.34 for PSX on May 1, 2012. If this method is used, the pre-distribution tax basis in COP shares would be allocated 77.09% to COP shares and 22.91% to PSX shares. See example below which assumes pre-distribution tax basis of $60 per share in 100 shares of COP common stock:

    • JUST HOPE THE I.R.S. DOESN'T KNOW HOW TO FIGURE IT EITHER. and all consider yourself lucky you got 66 for FREE....

      • 1 Reply to meteorbyte
      • Free? I don't think so. My COP dropped by $15/share. That's how much my "free" PSX cost me (us). But, I'm not complaining. I think in the long run I will be happy holding both COP and PSX. I plan to for now.

        BTW, Sharebuilder just posted our cost basis for both COP and PSX. PSX is $33.01/share. So, I'm starting off a little behind, but that'll change.

        Now, when PSX announces divies, I can calculate the real value of this investment going forward.


    • Your VALUE as in total $'s has to equal 100% but on a per share basis i.e. a share cost basis, you must adjust for the 1 for 2 ratio.

      Look at the example on the COP site. On a total cost basis assuming original cost basis of 100 shares @ $60/share, they get a total $ allocation to the PSX shares of about $1350 which is about 22.4%. BUT that value only gets applied across 50 shares so the per share cost basis is NOT .224*60 (for $13.44) but is .224*60*2 = 26.88.

      When you have multiple lots of a stock, you can either figure the cost of each lot in total, adjust for the new basis factor of 22.4% and then track what % of that lot gets sold (when you decide to sell). This isn't bad if you always sell lots in their entirety.

      Or you can figure the per share cost basis of each lot and when you sell you only need to know how many shares from that lot. I find the latter much more clear to understand when many lots are involved and sales are not always an entire lot.

      Note this is the way that the various programs I have seen do it (i.e. on a price per share basis, because that is the easiest to track in the long run over multiple lots.)

    • the multiplier factor may not be too difficult to figure....we MUST use the prices that these stocks closed at on Mon 4/30/12, then opened at on Tues 5/1/12:
      For COP:
      so the cost basis of your new COP= original price paid * .7623 or 76.23%

      For PSX:
      so the cost basis of your spun off PSX=
      original price paid * .4754 or 47.54%

      In both calcs the "original price paid" means the price you paid for the old COP.

      to check this calc:

    • Forget what I just asked... I got it for the idea for calculation from the ratio of the initial prices of the two stocks.

    • Thanks for all the replies... Can someone please provide the sources that give the answers. Are they from the company or IRS? Which authoritative document gives the approved answer, like this one it it is the correct answer:

      "allocation is .225 for PSX and .775 for new COP... have a nice day... "

    • This is really hard to find anything that helps us with the cost of PSX. I want to get out but I would like to know what
      the cost is.
      Anyone please help!

      • 1 Reply to pdewtex
      • First, you do not need to know your basis to get out. You don't need the precise answer until you file the associated info with the IRS (probably next year.)

        Second, I could point you to at least a dozen places several here or in the COP YHOO group where the method to calculate this is well spelled out. So I really don't understand your "really hard to find anything" comment

        Third, I am not going to give you a $ figure (as there is no single right answer) because it depends on what your original COP basis(es) were. I am not even going to give you an exact % value. But I will tell you that your PSX share price basis is about 50% of what your original COP basis was. And for new COP shares it is about 75% of what the old basis was. (And no, this does not mean your basis went up by 25%; you can't just add the two %'s together.)

    • You can use your original cost basis for COP (say it was 71), so if you sell today you take the loss.
      Then you can use zero as your cost basis for PSX, so if you sell today you claim the profit and the two trades offset.

      • 3 Replies to stuqidchick
      • You can do that but you will be in trouble with IRS if you do.

        See calcs elsewhere in the thread (along with the 2x correction.) But roughly it is about 50% of what your cost basis in COP was originally. So you you bought at 70, your PSX basis would be about 35.

        Remember, there is no single PSX cost basis. It depends on your original COP cost basis. Also don't forget you include the original costs of acquisition (i.e. broker fees). There is also some flexibility in the IRS regs on the prices to use. (But picking $0 ain't one of the options.) So there is no one size fits all answer. But the % of original basis will be the same (actually close give IRS flexibility) for all.

      • linda_mod May 3, 2012 12:14 PM Flag

        Your thinking could be wrong according to IRS. Why? Because I think COP is going to send you a 1099-DIV that shows the value of the PSX shares given you as a dividend! Next tax filing time, you will pay tax on that "dividend" and THAT figure will be your basis, or cost, of the PSX shares given you!

      • So do you think it is a good idea to sell PSX and buy COP with the proceeds? Seems logical

    • This is the right way and it works perfect, thanks to RANTK81:

      The IRS lets you use the closing price, opening price, or volume-weighted-average price of the stocks -- on the first date where the new shares are trading excluding the spun off company. For the calculation below, I will use the closing prices that Yahoo historical prices lists on 5/1/2012

      COP Closing Price on 5/1/2012 = 56.51
      PSX Closing Price on 5/1/2012 = 32.76

      Now, we must adjust for the fact that we have 2 COP shares for every PSX share. Let's calculate the denominator value for our percentage of the cost basis that will be attributed to each company:

      (2 * COP) + (1 * PSX)
      (2 * 56.51) + (1 * 32.76) = 145.78

      Now, let's calculate how much of the 145.78 value is attributed to the COP shares:

      COP = (2 * 56.51) / 145.78 = 77.5277816%

      And, the calculation for how much of the 145.78 is attributed to the PSX shares:

      PSX = (1 * 32.76) / 145.78 = 22.4722184%

      So, before the spinoff, find out what your total cost basis was for all of your shares of the pre-spinoff COP, and let that value be 'B'. Then, the cost basis for COP and PSX is as follows:

      COP Cost Basis = (B * .775277816)

      PSX Cost Basis = (B * .224722184)

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