Part of HPAA's Stock Recovery and Cost Basis Process. start here:
Employee Stock
This is a "One share walk-through" explanation of the HP
Alumni Association's "Pre-2001 Cost Basis and
Spinoff Tax Calculator." Download the current version at
HPAA Stock
cost basis spreadsheets
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Directions and Tips for Pre-2001
Excel:
Tips for using complex
spreadsheets -- with links to Microsoft articles
Given the original basis in a share of HWP (later known
as HPQ), or HPE, what is the basis in each of the various
fission products over the years?
The first tab, spreadsheet A starts with the IPO in 1957,
and shows the cost basis for the employee purchase plan(s)
and service awards, forward through 2017.
Jump to April, 2000, after 7 of the 8 HWP stock splits, row
[240].
1. Participants that spring purchased one or more shares
with an original valuation (and cost basis) of $135.00 per
share. (Remember the dot com bubble?)
We consider one share purchased, and its basis shown in cell
[B.240].
2. On 6/2/2000, each HP share was divided into
"post-spinoff" HP, and 0.3814 of a share of Agilent. The
original basis was split 78/22% to new-HP and Agilent.
Now you have 1 share new HP, ea. $105.30/sh basis [J.240]
0.3814 share of Agilent, $77.87/sh basis [K.240]
3. On 9/27/2000, there was a 2-for-1 split of (new) HP. That
doubles your HP share count, halves their basis, and has no
effect on Agilent.
2 shares HP, ea. $52.65/sh basis [M.240]
0.3814 share of Agilent, $77.87/sh basis [K.240]
4. On 10/31/2006, Agilent spun off Verigy.
94.22% of the basis in old Agilent stayed with new Agilent,
and 5.78% went to Verigy.
Each Agilent share produced 0.122435 share of Verigy. No
effect on HP.
2 shares HP, ea. $52.65/sh basis [M.240]
0.3184 share Agilent, $73.37/sh basis [N.240]
0.0467 share Verigy, $36.76/sh basis [O.240]
(On the "Data" sheet, it's noted that on July 4, 2011,
Verigy shareholders received $15 per share in cash from
Advantest (Japan.)
For Verigy shares in this lot, that was a $21.76/sh capital
LOSS.)
At each step, if you still have all the pieces, the TOTAL
basis is $135.00, allocated over the varying quantities and
types of stock.
The MFGP spinoff has a twist for U.S. taxpayers: as a foreign
company, the spinoff is a taxable event.
If your basis is less than the 9/1/2017 FMV price, the
difference is a gain that is "realized," reportable, and
taxable (even though you did not sell the shares).
A loss is NOT reportable however. The high basis of the
4/2000 HWP share that started this example results in the
MFGP fractional share being "underwater,"
so the basis is calculated the usual way, and carried
forward until you sell the shares (or the next spinoff).
Note the new basis for all lots that DID have a gain on
"opening day":
the MFGP basis is stepped up to the $29.34 FMV.
Here in 2018, that one starting share and its offspring (if
the Verigy hadn't been liquidated) would be:
2.0000 sh HPQ x $24.82 = 49.64
0.3814 sh Agilent x 73.37 = 27.98
0.0467 sh Verigy x 36.76 = 1.72
2.0000 sh HPE x 16.28 = 32.56
0.1718 sh DXC x 80.67 = 13.86
0.2746 sh MFGP ADR x 33.60 = 9.23
Modulo the rounding (here -- the spreadsheet preserves all
the digits), those sum to 135.00.
--end of example--
Sheet B provides for "enter your own basis" for HPQ shares
and sheet C similarly for HPE shares.
There are additional complications not tackled by this one
example -- including HP's option-based Share Ownership Plan
(starting in 2000)
and the associated tax reporting requirements.
--Tom von Alten
Original: Mar 29, 2014.
Updated Mar 5,
2018.
Corrected row references -- Jan 15, 2021.
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6. Stock cost basis spreadsheets