The bankruptcy filing by General Motors affected many investors. Unfortunately, the common shares of stock had no value after the GM bankruptcy reorganization was approved by the courts, However, the GM bondholders did receive some bankruptcy proceeds from Motors Liquidation Company in the form of four different securities on six different distribution dates.
This presents a problem for bond investors who need to know their cost basis in the four new securities. Costbasis.com is here to help!
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These four securities were distributed to bondholders:
1. New GM common shares
2. Series A $10.00 warrants expiring 7/10/2016
3. Series B $18.33 warrants expiring 7/10/2019
4. GUC trust units
The securities were distributed on:
1. 4/21/2011 (initial distribution)
2. 7/27/2011 (first excess distribution)
3. 10/25/2011 (second excess distribution)
4. 6/12/2012 (GUC trust unit)
In addition, the GUC trust made a third excess distribution of shares and warrants on 12/20/2013 and a fourth excess distribution of shares and warrants on 11/12/2014.
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| GM Bond Calculator |
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Click on the picture of the car to access the GM bond calculator. Just select the bond you owned and enter the par value, bond acquisition cost, and number of shares/warrants/units that you received on each date. Just like magic, we do all the accounting work for you!
The calculations are based on the relative market values of the four securities on the first day of separate trading. Since the last security was not distributed until June 12, 2012, and separate trading did not begin until June 14, 2012, you did not know your final cost basis allocation until that date.
If you already sold some shares or warrants in 2011 and claimed a different cost basis, we highly recommend that you amend your 2011 tax return to agree to the final correct cost basis amount. If you do not amend your tax return, allocate the rest of your cost basis to the remaining shares manually.
If you exercise any of the warrants to acquire additional shares of New GM common stock, your cost basis for those shares will be the exercise price paid plus the cost basis allocated to the warrants you exercised.
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The GUC (General Unsecured Creditors) Trust made a third excess distribution on
December 20, 2013, of the following securities:
Description
and CUSIP |
Exercise
Price
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Expiration Date
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Ticker Symbol
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Number Distributed per GUC Trust Unit
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Market Value per share on 12/20/2013 |
Total Market Value |
| GM common stock new 37045V100 |
n/a |
n/a |
GM |
0.211506 |
$40.99 |
$8.6696 |
| GM Class A warrants new 37045V118 |
$10.00 |
7/10/2016 |
GM"A |
0.192278 |
$31.27 |
$6.0125 |
| GM Class B warrants new 37045V126 |
$18.33 |
7/10/2019 |
GM"B |
0.192278 |
$23.21 |
$4.4628 |
| Total Market Value Received per GUC Trust Unit |
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$19.1449 |
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The GUC (General Unsecured Creditors) Trust made a fourth excess distribution on
November 12, 2014, of the following securities:
Description
and CUSIP |
Exercise
Price |
Expiration
Date |
Ticker
Symbol |
Number
Distributed per
GUC Trust Unit |
Market Value
per share on
11/12/2014 |
Total
Market
Value |
GM common stock
new 37045V100 |
n/a |
n/a |
GM |
0.116561 |
$31.42 |
$3.6624 |
GM Class A warrants
new 37045V118 |
$10.00 |
7/10/2016 |
GM"A |
0.105964 |
$21.56 |
$2.2846 |
| GM Class B warrants new 37045V126 |
$18.33 |
7/10/2019 |
GM"B |
0.105964 |
$14.18 |
$1.5026 |
Total Market Value received per GUC
Trust Unit |
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$7.4495 |
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The GUC Trust provided no guidance or tax opinion to unit holders regarding the detailed tax treatment of these distributions, leaving investors and tax preparers adrift. Costbasis.com will help you out here. Since the GUC Trust is still in operation and has not yet been dissolved, this is still an open transaction, recovery is not complete, and loss is not recognizable yet. Provided that you are a US Holder (as defined), the receipt of these securities on 12/20/2013 and 11/12/2014 should be recorded as a return of capital in the amount of $19.1449 per GUC trust unit on 12/20/2013 and $7.4495 on 11/12/2014 and reduces the cost basis of your GUC Trust Units (as initially computed by the GM Bond Calculator above). Once the cost basis of the GUC Trust Units has been reduced to zero, the remaining portion of the 12/20/2013 and 11/12/2014 distribution market value is a capital gain. Your cost basis in the securities received is the market value on the date of distribution with a new tax lot date of 12/21/2013 or 11/12/2014. Use the actual values shown on your own Form 1099 if there is any difference.
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Some readers have informed us that the rounding conventions used by their broker/dealer did not follow the ones used in the GM Bond Calculator. Shares were truncated by some brokers (meaning the fractional share was dropped) in the first distribution rather than rounded. All we can do is go by the instructions posted on the bankruptcy trustee's website. If the shares you received differ from those calculated, you will need to recompute the cost basis allocation manually for your own tax lots. You can use the GM Bond Calculator as a roadmap for how to do it. At least we provide you with the market values to use for each security received. The bankruptcy trustee did not provide this information on the website, even though it is critical to the cost basis computation. Perhaps bankruptcy lawyers do not focus on computational details like accountants do.
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