3c. Morgan Stanley issues with HP-related
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April 28: Morgan Stanley customers are getting different results from different parts of the company:
- Compaq employee stock purchase plan: People who bought stock under that plan, administered by Morgan Stanley's corporate benefits division "StockPlan Connect," were sent 1099-B forms dated 3/14/18 based on incorrect data entry from the HPE cost basis letter. One member discovered this and was able to convince Morgan Stanley to send corrected 1099-B forms dated 4/13/18 via postal mail to "you and 6,000 other HPE shareholders." (See Morgan Stanley cover letter below.)
- Morgan Stanley brokerage account: People who transferred their HP stock to a personal account at Morgan Stanley's local-office-based retail brokerage division were not sent 1099-B forms. There is no reference in their account to the intermediate Seattle SpinCo distribution. Cost basis for the MFGP shares is given as "Please provide." One member raised this extensively with their local Morgan Stanley broker and with customer service -- forwarding the HPE and Micro Focus cost basis letters -- but was unable to convince MS to send them a 1099-B.
Be sure to check for a "quarterly maintenance fee" on any Morgan Stanley account. Another member reports that a $200/quarter fee drained a relative's small, inactive account.
Amended return. You can file Form 1040X "...within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later." IRS link [When you launch TurboTax, it asks if you want to file an amended return.]
Morgan Stanley cover letter with corrected Micro Focus 1099-B sent to a participant in the Compaq employee stock purchase plan:
"CORRECTED COPY AS OF 04/13/18.
"Following is a corrected form 1099 for 2017. Initially, the proceeds amount was calculated with a conversion rate of .2208; the correct rate is .1373. The cost basis amount was calculated with a conversion rate of .1373 times the Micro Focus FMV of $29.34; the correct rate is .2208 times the original Hewlett Packard Enterprises [sic] cost basis. Note that each tax lot of HPE had a different cost basis."
[In other words, Morgan Stanley swapped the two numbers when entering the numbers into their system.]
How this happened:
- Compaq employee stock purchase plan: Compaq hired Smith Barney (now Morgan Stanley) as their Employee Stock Purchase Administrator. After the merger, CPQ shares converted to HPQ, which later spawned HPE, DXC, MFGP, and Perspecta. Unless moved, these shares are all now in a personal "StockPlan Connect" account at Morgan Stanley. It turns out that neither HPI nor HPE appears to have any current direct relationship with Morgan Stanley.
- Morgan Stanley brokerage account: Neither HPE nor HPI has a direct relationship with Morgan Stanley. Each of the 236 NYSE member firms (and others around the world) is expected to read SEC filings, analyze corporate actions, and update the records they maintain on behalf of their customers.
How to treat this on your 2017 US taxes: go back to 3. Micro Focus Tax
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