Altaba - Final Liquidation?

Geobrick

I just got the Altaba liquidation distribution ($8.33/share).

My Yahoo/Altaba basis was $34 per share (1999) and Altaba returned $51.50 per share last year leaving a gain of $17.50 per share (in my case). For my 2019 tax return, I entered it in Schedule D as a long term Capital Gain but wrote "Return of Capital" as the description column (a).

I'm not sure what the best way to put that and the final $8.33 into Quicken.

I could enter the first transaction as a 'sell' followed by an 'add shares' of Altaba (escrow) with $0 basis. Then for the the final liquidation, enter a 'sell' for the Altaba escrow shares for $8.33.

Does anyone have a better suggestion for entering the Altaba liquidation in quicken? There was another thread on this topic but it was closed.

q_lurker

I think what @Frankx was suggesting or expecting was that last year's transaction was or should have been a sale of the shares for the $51.50 yielding a capital gain of 17.50/share.  If that was a sale at that time, then the current 'distribution' would also be capital gains and could be recorded in Quicken as a long term capital gain distribution (CGLong).  

For my 2019 tax return, I entered it in Schedule D as a long term Capital Gain but wrote "Return of Capital" as the description column (a).

It is not clear what the 'it' was that you entered, but you seem to have reported all of the $51.50 received last year as LT Cap gains.  I don't know what your basis for that decision was.  Writing "Return of Capital" on the form seems contrary to reporting it as capital gains.  If you misreported on the 2019 return, the truly right thing to do is file an amended return.  You'd be due money back to the tune of the tax you paid on $34/share that you did not need to pay.  Up to you to decide if that is worth it.  

Overall, you received $25.83/share in taxable income ($17.50 last year + $8.33 this year, or $59.33 less your $34 basis).  Maybe you've paid tax on $51.50 per share. 

So do you want your Quicken to record the 'right' numbers, or to match your tax records?

Option 1
-- Change last year's transaction to a sale of all shares for $51.50/share
-- You no longer own any shares; the value goes to $0 (even though you get money this year)
-- Enter a CGLong for this year's transaction of $8.33

Option 2
-- Use two transactions for last year:
------ a RtrnCap of $34/share (your basis goes to $0)
------ a CGLong of $17.50/share
-- You still own shares.  You could value them at 8.33/share if you choose to.
-- This year you sell those share for the 8.33/share.  Since your basis is 0, it as all capital gains.

Option 3
-- Use two transactions for last year: 
------ a RtrnCap of $25.67 / share (your basis goes to $8.33)
------ a CGLong of $25.83 / share
-- You still own shares.  You could value them at 8.33/share if you choose to.
-- This year you sell those share for the 8.33/share.  Since your basis is 8.33, there is no capital gains.

In any of these cases, how you coordinate with your tax filings is your choice.  (I am not a tax pro nor am I qualified to give tax advice.)

Frankx

Hi @Geobrick

My understanding is that the recent payment was expected as part of the company's liquidation and that there will be at least one more future payment as litigation and tax issues are sorted out over the next few years when total liquidation will take place.

Your broker shows your holdings because you are still technically the holder of those shares, although their value will continue to decrease as liquidation payments are made.  While the stock no longer trades on an exchange it may be possible for you to sell them for whatever liquidated value may remain. I would suggest that you contact your broker to determine whether they may be able to help you.

Frankx

Frankx

Hi @Geobrick.

Since you recovered your entire cost basis in 2019 and you had held the shares at that time for more than a year, you should enter this distribution as a "long term capital gain distribution" or "CGLongX" with a transfer to the account where you are depositing the check.  Like this:


Let me know if you have any followups.

Frankx

Geobrick

OK but if I do it that way for last year's distribution, the basis for the Altaba shares is unchanged and the original shares remain in the account. Quicken assumes the amount of the CGLongX is 100% gain. How would I get quicken to account for the original basis?

Also, there's the new final liquidation of $8.33. If I enter that as a 'sell" at $8.33, with the original basis of $34, there would be a loss of $25.67. That would work. I would have 'overpaid' on the tax of the CGLongX in 2019 but it would eventually get offset by the $25.67 'loss' in 2020. That would account for everything in quicken but it would be stretched across a year.

So in the end, assuming this is the final liquidation, Altaba never returned the value it had at the the time it announced the liquidation. They were valued at about $70 at that time (though it was reported by some that it was undervalued compared to their underlying holdings of Alibaba). I guess those reports were wrong because in the end we got $59.88.

q_lurker

I think what @Frankx was suggesting or expecting was that last year's transaction was or should have been a sale of the shares for the $51.50 yielding a capital gain of 17.50/share.  If that was a sale at that time, then the current 'distribution' would also be capital gains and could be recorded in Quicken as a long term capital gain distribution (CGLong).  

For my 2019 tax return, I entered it in Schedule D as a long term Capital Gain but wrote "Return of Capital" as the description column (a).

It is not clear what the 'it' was that you entered, but you seem to have reported all of the $51.50 received last year as LT Cap gains.  I don't know what your basis for that decision was.  Writing "Return of Capital" on the form seems contrary to reporting it as capital gains.  If you misreported on the 2019 return, the truly right thing to do is file an amended return.  You'd be due money back to the tune of the tax you paid on $34/share that you did not need to pay.  Up to you to decide if that is worth it.  

Overall, you received $25.83/share in taxable income ($17.50 last year + $8.33 this year, or $59.33 less your $34 basis).  Maybe you've paid tax on $51.50 per share. 

So do you want your Quicken to record the 'right' numbers, or to match your tax records?

Option 1
-- Change last year's transaction to a sale of all shares for $51.50/share
-- You no longer own any shares; the value goes to $0 (even though you get money this year)
-- Enter a CGLong for this year's transaction of $8.33

Option 2
-- Use two transactions for last year:
------ a RtrnCap of $34/share (your basis goes to $0)
------ a CGLong of $17.50/share
-- You still own shares.  You could value them at 8.33/share if you choose to.
-- This year you sell those share for the 8.33/share.  Since your basis is 0, it as all capital gains.

Option 3
-- Use two transactions for last year: 
------ a RtrnCap of $25.67 / share (your basis goes to $8.33)
------ a CGLong of $25.83 / share
-- You still own shares.  You could value them at 8.33/share if you choose to.
-- This year you sell those share for the 8.33/share.  Since your basis is 8.33, there is no capital gains.

In any of these cases, how you coordinate with your tax filings is your choice.  (I am not a tax pro nor am I qualified to give tax advice.)

Geobrick

Thanks q_lurker.
The 'it' was the initial 51.50 distribution from last year.

I won't focus on the tax info because the important thing for the community is figuring out how to enter it in quicken so it best reflects what happened.

I'm going to attempt option 2 and see how that works.

For those reading this who are interested in how I handled the initial $51.50 on on my 2019 taxes, here's more detail.
On form 8949 Part II, I added a transaction called "Altaba - Return of Capital" and used the $51.50/share for the proceeds and my original cost as the basis. I paid tax on the resulting $17.50/share gain last year. This years $8.33 will be all gain.

Geobrick

I can't be the only one who's held Yahoo through to the Altaba liquidation so hopefully these posts help others.
It's now time to file my 2020 taxes so I'll be reporting the final liquidation of $8.33/share as sale with $0 basis. The E*Trade 1099 shows it in section 1099-B with no qty or acquired date. It just lists the proceeds and has a note under "Additional Information" that reads: RETURN OF PRINCIPAL. (Last year, the initial liquidation of $51.50 showed up in 1099-DIV , line 9, "Cash liquidation distributions").

Is there any reason why E*Trade still shows I'm holding all my shares of AABAESC? They show a value of $14.45/share. I thought the final liquidation occurred in November and the shares would vanish. Maybe I'm supposed to actually log in and sell them and put an end to what once was Yahoo.

Frankx

Hi @Geobrick

My understanding is that the recent payment was expected as part of the company's liquidation and that there will be at least one more future payment as litigation and tax issues are sorted out over the next few years when total liquidation will take place.

Your broker shows your holdings because you are still technically the holder of those shares, although their value will continue to decrease as liquidation payments are made.  While the stock no longer trades on an exchange it may be possible for you to sell them for whatever liquidated value may remain. I would suggest that you contact your broker to determine whether they may be able to help you.

Frankx

Geobrick

Thanks Frankx. I was on hold with etrade's corporate action group today but had to give up on waiting for them to pick up.

What you are saying makes sense. I wasn't aware there were any more steps to the liquidation because I thought the one in November 2020 was the final but you are probably correct. The Altaba FAQ page shows there could be more distributions and also says:
"Stock certificates are not required to be surrendered as part of Altaba’s liquidation and dissolution. Upon the payment of the final liquidating distribution, Altaba will issue a press release to the effect that all outstanding shares will be deemed to be cancelled. Therefore, there will be no collection or surrendering of stock certificates."
I don't remember seeing such a press release yet so maybe there will be another distribution.