Cost basis of NRZ shares issued to NCT holders. Like your ansswers.
I posted this earlier and I don't recall seeing anyone with an explanation for this. I've called NCT inivetor relations twice without answer and I emailed them this AM. The May 6 letter from NCT to its shareholders states:
“Tax Basis and Holding Period of New Residential Shares Received by Holders of Newcastle Stock
A Newcastle stockholder’s tax basis in shares of New Residential common stock received in the separation
generally will equal the fair market value of such shares on the date of the separation, and the holding period for
such shares will begin the day after the date of the separation.”
Question: is not the fair market value of NRZ shares the opening first day trading price of $6.55 per share (established in the prior days WI trading)? If so, then this is the cost basis of our NRZ shares. Scottrade, and I asusme your other brokers, have diviided our total original cost basis in NCT shares with 54.4% of the original cost basis in NCT going to NRZ and 45.6% of total original cost basis remaining in NCT shares. The cost basis using this calculation would be different for every stockholder depending upon their cost of orignal purchases in NCT. In one of our accounts this worked out to $3.0179 for NRZ and $2.5281 for NCT, obviously not $6.55 per share.
So how did NCT arrive at distributing the cost basis the way they did in light of their letter to shareholders?
Relax. You'll get a letter, probably very shortly, explaining everything to you. Is this the first 'spinoff' you've been involved with, and why do you need the information right this second? If you're a 'day trader' that's one thing but then you wouldn't care.
Yea, right. I wrote a letter both to Scottrade and Newcastle. As a matter of fact, I received a telephone call from Scottrade today informing me that their original costs assigned were being replaced today by different numbers and I would have them tomorrow morning for viewing. Did not explain why or what the changes were.