dar, voting with your feet means sell. Are you selling NRF?
I agree it is a long road back. Trust lost is difficult to regain. Complexity (which to me is the bigger issue), takes time to unwind.
There is a lot of truth in the statement that the day you buy is the day you make the profit.
Stock price performance is never to be ignored, but is also not all revealing. With time, we will find out whether or not the price performance was predictive.
From memory, the last two owners of the German tower did not make money and the sale was either somewhat of a distressed, or perhaps just tired owner, sale.
That history generally means buyers take a good hard realistic look at price.
Show may be the wrong word. It is always better mgmt buys than not, but it is likely not anything meaningful to hang your hat upon.
I agree with dar, this is for show.
I knew a public company that gave out bigger bonuses, with the explicit instruction that the incremental amount of the bonus be used to buy stock.
Dar, I have never thought about how the price for fractional shares is determined, because it is immaterial.
If you look at the DuPont Chemours spinoff (very recent), DuPont aggregated the fractional shares, sold them in the market, and the price received determined the price paid. Completely unrelated to any valuation for tax purposes - simply related to the price they got in the market.
Weak sauce, dar. You were deflecting the discussion to how the IRS pursues and prioritizes actions, not the law as it relates to determining basis allocation on a spinoff.
My reference was not to a company taking a tax position but providing information to shareholders that will allow shareholders to comply with the law. They strive to provide accurate information for shareholders to use in preparing returns in accordance with the law.
NRF, DuPont, McDermott Intl and others have said that federal income tax law does not define how such allocation is done. If it were black and white that there is only one method, as you say it is, why would the companies say otherwise to their shareholders? Why would they provide examples that do not follow your approach? Why would their tax counsel allow them to provide incorrect information?
This is silly. You can believe as you wish. Companies do not provide incorrect tax information, consistently across a large number of companies, simply because it is a small difference to each taxpayer. Companies strive to provide the correct information, always with the caveat of seeking your own tax counsel.
I have considerable experience in the matter as well.
dar, you are suggesting that because NSAM was tax free that NRF purposely provided a wrong example, and filed it with the IRS? That their text was incorrect? That their communications to shareholders about tax treatment were incorrect? And that every other spin I have every received was wrong as well?
There is a lot more to tax than just the proscribed law and regs.
dar, NRF's tax basis document re: the NSAM spinoff. I think NRF's tax advisors would disagree with you.
The allocation of tax basis between NRF common stock and NSAM common stock received in the Distribution is to be based on their relative fair market values on the date of the Distribution. U.S. federal income tax law does not specify precisely how to determine these fair market values. In general, fair market value of property means the price at which property would change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of
There are several potential methods for determining the fair market value of NRF common stock and NSAM common stock. One of the methods is to use the average of the high and low trading prices of NRF common stock and NSAM common stock on a “when issued” basis quoted on New York Stock Exchange on the date of the Distribution. Another reasonable method would be to use trading prices of NRF common stock and NSAM common stock on the first day of trading following the Distribution. Additionally, other methods of
determining the relative fair market values of the NRF common stock and NSAM common stock are also possible, such as the closing stock price at the end of regular business trading on July 1, 2014.
Item 16: Description of the calculation of the change in basis and the data that supports the calculation The following is an example of the basis allocation for an NRF Shareholder using the closing stock price at the end of regular business trading on July 1, 2014 for NRF common stock and NSAM common stock. This example is being provided solely for illustrative purposes and as a convenience to NRF common stockholders
and their tax advisors.For the purposes of the
Ah, Oct 31st is Saturday. The perils of intl travel.
Your method is one for a non trading day valuation. I would contend that just as the IRS has no definitive method for valuing securities on a trading day, there is no definitive method on a non trading day as well.
I am off a day, intl travel. The 31st is Saturday, so dar is right for a non trading day.
Still, for most transactions it is as I stated - there is no definitive method. (and may not be for a non trading day either for the reasons I stated. It simply makes no sense to have only one method for a nontrading day, and allow multiple methods on days where there is trading.)
There are general standards. Several cite avg of high and low on valuation date (one day, not multiple days). See publication 561 of IRS. See IRS Reg. 20.2031-2(b). See § 25.2512–2 (Just a couple quick ones I turned up.)
Dar quotes, amidst calling me names because I dare to question his accuracy , the estate tax form instructions. (Aside, a taxpayer might get away with relying on tax form instructions, but they are hardly authoritative and are subject to error. Remember, if you call the IRS the answer they give you has a high probability of being wrong),
But the key is determining FMV, and one size does not fit all. If there is only once acceptabl way, the companies doing spinoffs with their high priced tax counsel don't know what they are doing. Why would NRF say what they do and use end of day? Why would another spin use opening prices?
dar, that is not the IRS rule on determining FMV. See lunco's thread where I discussed such (or on where I brought it up with you some time ago). Anyone who held NRF through the NSAM split should know it is not the IRS rule either, if they read the documents NRF posted about basis allocation.
Why use high and low on two different days? IRS says it is the FMV distributed, and does not define FMV for a public security. If you don't believe me, simply read the NRF document on basis allocation regarding the NSAM spinoff. They say: "U.S. federal income tax law does not specify precisely how to determine these fair market values...There are several potential methods for determining the fair market value of NRF common stock and NSAM common stock." (By the way, none of the methods they list included high low on two different days - but of course their list was not exhaustive).
When NRF provided an example, they used the closing price as of the first day of regular trading. Another recent spin used the opening price on the first day of regular trading.
There is no one way - despite posts to the contrary. I typically use the example provided by the company. However, my bias is regular trading vs when issued, and end of day rather than open or avg of hi/low. Close of the day has allowed trading to settle out somewhat, whereas open (and often one of the high or low) are a result of illiquid initial trading.
You are welcome!
1) I understood it was an estimate subject to uncertainty
2) I was not throwing stones, merely pointing out the fact. In fact, I appreciated the effort. I did not call names or denigrate the effort.
3) Looking back at whether something was right or wrong is an inherently useful exercise.
3) If it was not intended to estimate value, then why bother? Anybody can come up with a disclosed methodology to do a calculation. Most investors are only interested in ones that have some predictive value.
While you are right that the best evidence of value is a freely traded security, evidence of value is not the same as value. If it were then NRF et al are where they should be. I think most shareholders believe (and hope) that is not the case.
Unfortunately, it was the wrong answer. $3.16 (lunco) and $3 (dar) translate into an NRE price of $18.96 and $18.00.
In another thread, dar revised his estimate to (roughly) 2.58 to 3.38, which would mean 15.48 to 20.28.
NRE closed in when issued trading at $13.80. Of course, that will change.
Thanks, cwn600. I don't think dar prefers or demands to remain ignorant. I think he demands to be thought of as infallible. dar is often right, but there is a different between often and always.