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Interesting, seems to make a little sense, especially since I think the full amount will be paid out to Piers (eventually).
No I didn't receive, although I just moved so not sure how to update my address with KCC, I hadn't thought about it being separate from my broker.
I presume though that most of these smaller claimants would receive cash and not Notes, but not sure (and I guess the overall amount is pretty small so probably easy to do). Pay $89K to save $1-200K, no brainer. I hope no one objects, may cost more to have a court hearing than to pay.
No, $3.40 per old H or per new LTI share (as I have estimated) is face value redemption or payout. The interest that is currently accruing to your LTI account is nominal. When distributed (unless redeemed by WMIH or Insurance sub) the notes will pay the going interest rate of 13% to its then new holder.
Currently the notes are yielding 13% but the holder right now is the Liquidation Trust, so they are earning the interest. Once distributed the note will be held by the investors (you and I) and the investor will then earn the interest until redeemed. (There is of course the possibility that the note could default - but the risk is much lower now than when it was issued based on market factors in "our" favor, i.e. the housing market recovery and reduced claims on the insurance fund.)
Yes, it is just the beginning. There is still the tax refund and likely reduction in employee claims that should get H's to full face value. Now, timing I have no idea; there is much speculation on when it could happen - but I like to stick to facts.
Sure we would, if someone is willing to give us shares at those prices!
Face value of RON held by the LT is ~$102M. According to my calculations this will result in about $3.40 per old H share paid on Feb 1, 2014 in the form of notes yielding 13%.
It finally begins.
I agree if you are in when the announcement is made you will reap the rewards or sorrows. The effective date of ownership won't be based on a date in the past, it will likely be a date in the future in fact but the pricing will become effective based on result that is announced.
When dividends are announced they also announce an effective date or date of record - usually a month or more in advance. Then the value of the dividend becomes priced in the next trade (or trade day) but the dividend is paid according to the announced date of record.
They need to finally close all the claims. I suspect they are dragging their feet on getting more $$'s until then.
The IRS may be slow, but it doesn't take a year plus to get a tax refund - which would put enough $$ into the trust to make a significant payment to H's.
Just saying.
I think the trust Rep is probably correct, which makes little sense for us average investors who are unaccustomed to investing in debt securities. I wouldn't have agreed but the articles Mordecai posted were quite informative and match the information you received from the Trust Rep.
Now, as I mentioned before, there is no basis reported to the IRS. So if you . . .
If you report the gain as indicated using the sales price listed on the 1099-B, which the IRS will be looking for, you should use your original purchase price, which will be a gain for most of us. You will have a new adjusted basis of the proceeds amount, and any further gain will be based on the trust receiving more funds and actually paying them out now.
The disconnect here is the brokers will still be reflecting and accruing OID for you based on your original purchase amount. Someone needs to get these two parties together.
Edit: I just received my 1099 that you have all been discussing. So now I'm not going blind in my comments anymore!
"the 1099 says sales proceeds not basis. ?????? "
I'm not sure if you are asking me a question of trying to help me understand this.
My 1099 from my broker only addresses the OID prior to the bankruptcy closing. I received some OID for Jan and a few days in February with an adjusted basis reported to me not the IRS.
I have not received a 1099 from the Trust. If the trust 1099 shows proceeds not basis and your broker shows basis and no proceeds, maybe you should be reporting them jointly! Just a thought.
"claimants in Class 16
were treated as receiving additional
distributions with respect to their claims
, creating basis in their interests in the
Liquidating Trust."
Treated as receiving but not actually receiving. The accounting in the liquidating trust is certainly screwy. Normally when you receive a distribution this would result in return of capital or proceeds not basis.
Thanks for the information Mordicai. This whole drama has been going on for far too long.
I briefly read the first piece and skimmed parts of the second. I must confess I hadn't thought about the H's as debt from the investor side (I know they are jr debt in the priority chain) since they are traded as equity not on the par system of traditional debt instruments.
My first thought is most of what you posted applies more to the corporation side as they are the one that recognizes the COD (Cancellation of debt) income. However, the second piece clearly said there may be costs for the investor. This I'm having a hard time seeing at the moment. The H's were public traded but the subsequent security is not (if you can call it that). So to assign an actual value (maximum recovery being the obvious amount) I'm not sure if that is correct. However, this would result in a gain if someone paid less than $10 per share (I can't remember the exact amount and don't have my statement handy). This would then be recovered via a deduction for OID (original issue discount) based on actual payments received of less than full "face" which then becomes simply a return on capital with our nominal interest income.
Hmm, maybe that is the actual answer. Personally I only hold 10 H's in my taxable account so I'm not to worried! The rest of my H's are in my Roth so I dodge solving the problem on my own tax return.
Well, I'm at the office today to help my clients with their own tax problems, and none of them had H's so I'll let this one percolate.
I haven't received a 1099 from the liquidating trust. Most of my shares are in my Roth IRA, but I did hold a few H's in my taxable account at Scottrade and some K's in my taxable account at TDAmeritrade. Both my 1099's from the actual brokers are correct.
If I did receive a 1099 that was clearly wrong I would try contacting the issuer to have them fix it. Since you didn't receive anything yet - you shouldn't receive a 1099 until 2013. However, I doubt that is likely to be overly helpful but worth a try. Otherwise I'd report the distribution on your tax return and adjust it for a basis equal to the reported distribution. Then I'd report the correct gain in the year received. No way I'm paying taxes for something I haven't received yet.
I'll second that! My order was in at 4 cents and got them for 3.7 cents!
Well, if you or he take a 50K loss in 2012 based on a broker provided 1099-B I'm not going to argue with that (might even do it myself) as it is a current benefit.
However, as you point out, you can only deduct 3K after any other capital gains you might have.
However, if/when we receive a payout, let's say 50K you should also receive a 1099-B from your broker and this is going to be capital gain also, long-term capital gain. As you point out, no remaining basis all gain. However, since it is capital gain you would deduct your carry-forward amount from 2012 of 47K or whatever amount is remaining.
I wouldn't worry about what the other poster is doing. If someone is having trouble reporting this and especially if they are receiving payments of 50K, they really need to see an accountant who can help them. The gains on this will all be long-term capital gains and subject to the favorable tax rates 0%/15%/20%/20.9% depending on your tax bracket.
I'm not sure I follow your problem. If you are trying to manually adjust your basis at your broker I have had trouble with TD on that very point. They have screwed up my P's as well.
However, with H's its a little harder to screw up. All we have is the holding cusip. There are really only two options from the broker's standpoint, either you recognized the loss upon conversion a 2012 transaction or the basis carried over to the new cusip (the later is the correct treatment.)
All of that aside, it doesn't matter what the broker does, it matters how you report it on your taxes. I doubt the broker will provide basis on this mess to the IRS unless they do it for 2012. If they fail to report, just report it correctly yourself when you file. If they do report basis and do it incorrectly there is a box to check in preparing your tax return to adjust the basis for proper treatment.
If you aren't sure how to handle it on your taxes find a local accountant. If you are in Seattle/Bellevue, I can help you out when the time comes. For now, we don't have anything to worry about, we haven't received a payout and you shouldn't have received anything on your H's for 2012 taxes. If you did, you are welcome to take the loss in advance which will leave you with a zero basis against future gains. No big deal, while technically incorrect, just be consistent. The IRS is only going to object if you try and take the basis now and again later.
The most appropriate method is to carry your basis over and deduct what you receive against what you paid. If you already reported your loss on your 2012 taxes you got to deduct the loss against your gains and up to $3,000 against ordinary income. Any additional amount carries forward to 2013.
Oh yeah, 1% a year of additional potential! Ok, a slight bit of sarcasm. It is certainly much better to accrete interest than to lose interest to other parties.
Hopefully this pays off in the next quarter or two when the tax refund is collected (anyone know what the holdup is on this one?) and a few more claims are denied.
That way any actual litigation proceeds will be gravy.
I'd think with all of the optimistic price projections for next week everyone would be buying every share they could get their hands on! And there were shares for sale.
I too hope to see a nice bump next week. :)
If you are looking at the JPM objection at its face and completely objectively I think you draw the wrong conclusion.
JMP is jockeying for position because they don't think enough money is coming our way. If they KNOW that money is coming our way, and it was enough to reach shareholders, then they wouldn't be worried about which creditor group they as bondholders were with. All the bonds will be paid before any of the shareholders see a dime.
Now if you want to go all conspirator theory or what you believe will happen you are reading more than that into this particular filing. I can tell you I believe something good will happen, but I don't think you can draw the conclusion this will be worth a buck because JPM is jockeying for position.
I will also say that I did buy another block yesterday to increase my position, so I clearly think there is a good chance we are on the right track, but again, not based on the fact JPM is jockeying for position.
DR, Thanks for the good summary!
Looking forward to the DC action now! Do we need this Bankruptcy plan approved before that one proceeds?
Their loss, my gain! I'm filled up now. Unless the bottom really falls out then I might buy more. Not expecting that though.
The 5900 shares purchased at .255 are in my account! And if they drop the price back down I still have an order in for more. Hehe.
Well, if everyone thinks this is going to be that high tomorrow, I'd better sell! In the past when everyone is that optimistic it usually is a peak not a continual up swing. I hope you all are right though.
That's how you play these stocks. We can all get excited about the long term potential but if we are wrong then you can be glad you made a few bucks along the way. Besides its more fun this way. And selling a handful of shares at .30 doesn't affect the overall momentum if it is for real.
For my part I sold 1/4 of my holding yesterday at .3 and I have a buy order at .22 currently. If I fill great, if it runs, even better.
Hehe, yeah I know. But my prognosticator ability is fairly limited so I can't see too much further into the future!
Not this year
Nice analogy!
I too just noticed the LTIC1 for the WAHUQ shares. However, I have had ESC08 for my DIMEQ shares since the initial close of bankruptcy. I have also received small payments earlier for my DIMEQ shares.
I recall that there were several different elections that could be made, so the differences in symbol pertain to different elections made.
I am hopeful that the DIMEQ will receive the rest of their initial cash payout and that the WAHUQ will also start receiving payments, maybe as early as with the trust distribution scheduled for Nov.
One small clarification, the gains are taxed at ordinary income rates not at capital gains rates when you take a distribution from your IRA.
A traditional IRA shields you from paying taxes when you sell your stock. However, you will still pay taxes on the full amount when you take it from the IRA. Don't put the money into the IRA unless you intend to hold until retirement, since there is additional penalties for early withdraw.
For a true shield, use a Roth IRA, as this can be taken tax free when you retire.
Escrow shares are still very much alive. It's just a matter of following the waterfall. Once all of the disputed claims remaining in the liquidation trust are resolved funds will payout down the waterfall. The liquidation trust is holding some of the run-off notes (don't know if those will be distributed or just collect the income and distribute proceeds), an estimated 96M tax refund receivable and more than 200M restricted cash waiting for resolution of disputed funds.
By my calculations (assuming some but not all of disputed claims are resolved favorably) the H's will be made mostly whole (i.e. receive their approximately $10 per share.) After that most of the current LTI shares issued will be paid.
Then it will be time to wait on the litigation proceeds. There is $20M set aside to pursue these claims. Based on my calculations, these funds will primarily be paid out to preferred and common shareholders at the time of confirmation who are now holding non-transferable escrow shares.
** If you want more accurate numbers look up the quarterly statement for the liquidation trust, has pretty good information on where things stand. My numbers above are based on memory.
If you want the tax-free distribution you mention in your post, better make sure you are using a ROTH IRA.
You will still use your original purchase date and price to calculate your gain or loss. It the accounting world we call it, your holding period tacks onto the new security. In short, yes, it sounds like you will still have a long term capital gain or loss.
Yeah, I think I have a crappy broker. I am using ING Direct as I can transfer funds from savings and the funds are immediately available. I think I'll get back to my regular broker for additional trading.
According to my broker, trading is currently suspended. They couldn't say why.
Edit: It must have resumed as I see a few small active trades.
To insert some additional data points: Has anyone looked at the recent short report for WAHUQ?
Short Interest (Shares Short) 5,700
Days To Cover (Short Interest Ratio) 0.1
Short Interest - Prior 137,800
Short % Increase / Decrease -95.86%
Since the beginning of October the short interest in WAHUQ has been almost wiped out. Current price aside, I'm ecstatic!
Add to that PQ's shorts have also been basically eliminated and even UQ's have seen a dramatic decline. Something is happening behind the scenes! I don't have a clue when we'll see it, but my guess is that the time is near.
Lawrence,
I think you miss the point. This is a group of people who are protesting the socialist give away to big banks (one part). They are protesting corporate greed. On the one hand corporations are all about making money and are the core of capitalism. But you know as well as any here that the big banks (can we say JPMChase) are doing much more than competing in a capitalist manner, they are lying, cheating and stealing.
If that is what capitalism has become - then our country is already in a free fall.
If you don't want to join this protest, feel free to stay home and avoid getting involved. However, all of us who have been following the WAMU story for the past three years are not typically the sit at home sort. This is one way to make our voices be heard in a collective manner.
Let us push to restore Glass-Steagall and separate the investment banks from the commercial banks.
That's my perspective anyway.
Now the real reason I logged on to post today. I just read an article in the Seattle Times:
http://seattletimes.nwsource.com/html/nationworld/2016371952_wallstreet01.html
OCCUPY WALLSTREET!!
We have talked about making a statement and protesting as a group. Here is a group that captures the essence of the problems behind the current economic crisis - which those of us following WAMU certainly are more aware than most of the larger problems.
Those that live in Seattle, there is a protest scheduled for the rest of the day at Westlake Center in downtown.
http://www.occupyseattle.org/
We can make a difference, and Wall Street will take notice as this movement gains traction.
I'll see you at Westlake Center.
The short position on common's has steadily been climbing. The short position on P's has been cut by 50% over the last couple of months. The short position on K's has held steady. The dollar value of shorts at their relative pricing are roughly similar on P's & K's, with a substantially larger amount (not counting NSS) on the commons.
My personal theory is that the MM's control all classes of stock via the P's as they are the easiest for them to control based on the relative dollar value of a minimum full order.
Fsshon,
You make a great point. Wouldn't JPMC want the bankruptcy settled and closed before Anico gains any further traction. If they kick-in enough to get the much needed releases then they can just deal with Anico.
If Anico continues to proceed and more information is brought to light, that would likely make the releases more expensive then they likely are right now. Maybe JPMC has more incentive to settle this during mediation than I have been thinking they did.
Just my thoughts.
Rumble
Be careful, with FJR the H's are going to end up paying the difference between FJR and the contract rate for the Senior noteholders.
H's are the biggest losers in the recent opinion. I don't know what their real remaining value will end up being, but certainly less then the principal amount they have coming to them.
See warcton's post on P board.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=67084349