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Posted by Susan Grossman on February 12, 2007, 11:40 am
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I'm pulling my hair out in frustration.
How do I figure out the COST BASIS of Verigy & Agilent stock?
Long ago I bought HWP (Hewlett Packard) and long ago sold it (as HPQ).
Meanwhile, HWP dividended off A (Agilent) which in itself dividended off
VRGY (Verigy).
In 2006 I finally sold both the A and VRGY shares, completing the sale.
My problem is that I have no idea what my COST BASIS is for the A and VRGY
shares are (I sold the HPQ at a loss a few years ago).
Can you tell me HOW I am supposed to get my cost basis for tax purposes on
the A and VRGY shares?
Sue
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Posted by Susan Grossman on February 12, 2007, 11:57 am
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On Mon, 12 Feb 2007 16:40:24 GMT, Susan Grossman wrote:
> I'm pulling my hair out in frustration.
> How do I figure out the COST BASIS of Verigy & Agilent stock?
Complicating things is the fact that FRACTIONAL shares were already
accounted for in previous tax years as they were received in money.
Is there a web site showing how to treat, say, 100 shares of HWP which spun
off the A and VRGY stocks (including fractional shares)?
If I could figure out how to handle the first 100 shares, the rest would be
easy.
Is there a web site showing how to treat a 100 share HWP->HPQ->A->VRGY
split situation?
Sue
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Posted by John Pollard on February 12, 2007, 12:16 pm
Please log in for more thread options Susan Grossman wrote:
> Susan Grossman wrote:
>
>> I'm pulling my hair out in frustration.
>> How do I figure out the COST BASIS of Verigy & Agilent
>> stock?
>
> Complicating things is the fact that FRACTIONAL shares
> were already accounted for in previous tax years as they
> were received in money.
>
> Is there a web site showing how to treat, say, 100 shares
> of HWP which spun off the A and VRGY stocks (including
> fractional shares)?
>
> If I could figure out how to handle the first 100 shares,
> the rest would be easy.
>
> Is there a web site showing how to treat a 100 share
> HWP->HPQ->A->VRGY split situation?
I think the company's "investor relations" web pages can usually
help. Here is one for HP / Agilent.
http://tinyurl.com/ywphn6
I think you can find similar info for any Agilent spinoff at the
Agilent web site.
--
John Pollard
First initial underscore Last name at mchsi dot com
Please reply to newsgroup
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Posted by TomYoung on February 12, 2007, 2:28 pm
Please log in for more thread options > On Mon, 12 Feb 2007 16:40:24 GMT, Susan Grossman wrote:
> > I'm pulling my hair out in frustration.
> > How do I figure out the COST BASIS of Verigy & Agilent stock?
>
> Complicating things is the fact that FRACTIONAL shares were already
> accounted for in previous tax years as they were received in money.
>
> Is there a web site showing how to treat, say, 100 shares of HWP which spun
> off the A and VRGY stocks (including fractional shares)?
>
> If I could figure out how to handle the first 100 shares, the rest would be
> easy.
>
> Is there a web site showing how to treat a 100 share HWP->HPQ->A->VRGY
> split situation?
>
> Sue
I'm going to assume you knew, and still know, what your original basis
in HP was. That is, how much money you spent acquiring your HWP
shares.
At the time you sold your HPQ, which was after the two spin-offs, you
should have calculated a new (reduced) basis for your HPQ and used
that basis for the calculation of the loss on sale you reported in
your tax return. If you subtract the basis reported in that tax
return from your original basis in HWP you've got the total basis in
the two spun-off stocks. It really doesn't matter how you allocate
this basis between the two stocks; the TOTAL gain or loss will be the
same.
If you (or your tax preparer) never allocated the original basis in
HPW to account for the spin-offs and it was the original basis in HPW
that was used to calculate cost for the fractional shares and the
subsequent sale of HPQ then your basis in A and VRGY is zero. You can
report the sales of A and VRGY as pure profit, or, possibly, go back
and amend the original return to reduce the loss in HPQ and then use
the remainder of the basis to reduce the profits in A and VRGY.
Tom Young
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Posted by R. C. White on February 12, 2007, 3:18 pm
Please log in for more thread options Hi, Susan.
Sometimes the only right answer is to start over. :>( And sometimes
amended tax returns are required to straighten things out.
First, some dates would help: How "long ago" did you buy HWP? And how
"long ago" did you sell HPQ?
The AGP spin-off from HWP was on June 2, 2000. See this page:
http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-faqAgilent
The quickie version of that page says:
> 22% of the original cost of your HWP shares may be allocated to the
> aggregate of Agilent shares plus cash in lieu of fractional shares.
> The remaining 78% may be allocated to the original HWP shares.
And, see the PDF file reached by clicking on the U.S. Tax Information link
in that paragraph, which takes you to
http://media.corporate-ir.net/media_files/irol/71/71087/faq/agilent/taxinfo.pdf:
> You received .3814 shares of Agilent Technologies for each Hewlett-Packard
> share owned by you
So, if you deducted 100% of your original HWP basis when you sold HPQ, then
you did it wrong and reported too small a gain (or too large a loss). You
SHOULD file an amended return for the year of that sale. If that sale was
before 2003, then it's probably too late for an amended return since the
normal 3-year statute of limitations for the 2002 return expired on April
15, 2006. Still, even though it's too late to adjust your 2002 return, it
is not too late to correct the basis of your A and VRGY shares. (In some
cases, the statute of limitations is extended, such as if the return was
filed late, or significant income was omitted, or fraud is suspected.)
The Verigy spinoff from Agilent was completed on October 31, 2006. See this
page:
http://investor.verigy.com/distributionInfo.cfm
> On October 31, 2006, Agilent Technologies, Inc. completed its distribution
> of the shares it owns of Verigy Ltd. Agilent distributed 0.122435 of a
> Verigy ordinary share as a dividend on each share of Agilent common stock
> outstanding on October 16, 2006, the record date for the distribution.
> After the distribution, Agilent no longer holds any ordinary shares of
> Verigy. Additional information about the distribution may be found in the
> following documents.
Your sales of A and VRGY must have been after 10/31/06.
This is how I think you should compute your 2006 bases, assuming you bought
100 shares of HWP at $100 per share before June 2, 2000, for a total basis
of $10,000:
6/2/2000: Allocate basis on Agilent spinoff:
78% of $10,000 to original HWP Shares: New basis of HWP: 100 shares at $78
= $7,800.00.
22% of $10,000 to Agilent: 2200 / 38.14 shares = $57.68 per share
Basis of fractional share sold: $57.68 * .14 = $8.08
Basis of 38 whole shares: $57.68 * 38 = $2,191.84
Proof: $7,800.00 + $8.08 + $2,191.84 = $2,199.92 (rounded to $2,200.00)
10/31/2006: Allocate basis on Verigy spinoff (see this page, reached by
clicking the "Tax Basis Information" link on the Verigy page above):
http://files.shareholder.com/downloads/VRGY/94059746x0x58774/0126328F-0F73-4872-AEFC-4A714255ED30/A-VRGYTaxBasisAllocation10-31-06.pdf
38 Agilent shares * .122435 = 4.653 Verigy shares
94.22% of Agilent basis to Agilent shares: .9422 * $2,191.84 = $2,065.15 /
38 = $54.35 new basis per Agilent share
5.78% of Agilent basis to Verigy shares: .0578 * $2,191.84 = $126.69 /
4.653 = $27.23 new basis per Verigy share
Basis of fractional share sold: $27.23 * .653 = $17.78
Basis of 4 whole shares: $27.23 * 4 = $108.92
Proof: $2,065.15 + $17.78 + $108.92 = $2,191.95 (rounded to $2,191.84)
So you should have reported the sale of the fractional share of Agilent in
2000. You should have used the new basis for HWP when you sold HPQ, between
2000 and 2006. And in 2006, you should report both the sale of the
fractional share of Verigy, plus the final sales of your remaining shares of
Agilent and Verigy.
If I've misunderstood any of what you said, please post back. Check with
your own CPA to be sure to get it right, and to see if an amended return is
possible - or advisable.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> I'm pulling my hair out in frustration.
> How do I figure out the COST BASIS of Verigy & Agilent stock?
>
> Long ago I bought HWP (Hewlett Packard) and long ago sold it (as HPQ).
> Meanwhile, HWP dividended off A (Agilent) which in itself dividended off
> VRGY (Verigy).
>
> In 2006 I finally sold both the A and VRGY shares, completing the sale.
>
> My problem is that I have no idea what my COST BASIS is for the A and VRGY
> shares are (I sold the HPQ at a loss a few years ago).
>
> Can you tell me HOW I am supposed to get my cost basis for tax purposes on
> the A and VRGY shares?
>
> Sue
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