CitiGroup Reverse Split

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Topic Author
Kelty
Posts: 21
Joined: Sat Feb 18, 2012 1:12 am

CitiGroup Reverse Split

Post by Kelty »

I am a new Vanguard investor but still have investments with another financial organization.
Through the other organization I bought about 100 shares of CitiGroup a couple of years before the crisis of 2008.
In May 2011 CitiGroup did a Reverse Stock Split, leaving me with about 10 shares at about 10 times the price (a virtual wash).
It also left me with a Capital Loss of about $500 that I am taking on my 2012 federal tax return.
On the surface this Capital Loss seems to be an okay thing since it is saving me a small amount of money on my 2012 taxes.
However, although I seem to understand what has happened, I do not understand the implications.

Should I have sold my CitiGroup before the Reverse Split?

If I hold CitiGroup and by some miracle it goes up could I be surprised with Capital Gains?

Is there anything else I could be surprised with?

Should I sell my CitiGoup and take a 2012 tax loss (assuming it fits with my 2012 tax situation)?
The fee for selling would be around $100 plus any hidden fees I don't know about.

Are there other questions I haven't thought of?
FedGuy
Posts: 1677
Joined: Sun Jul 25, 2010 3:36 pm

Re: CitiGroup Reverse Split

Post by FedGuy »

I could be wrong, but I'm pretty sure that a reverse stock split, in and of itself, does not have any tax implications except to the extent that they might send you cash for fractional shares. If you spent $100 on 100 shares of stock, and then the value of those 100 shares drops to $80, and then they do a reverse stock split such that you now have one share worth $80, nothing happens...you still have a $100 basis in the stock, and until you sell it, you don't take capital gains or capital losses.
hlfo718
Posts: 808
Joined: Wed Dec 01, 2010 8:17 am
Location: NYC

Re: CitiGroup Reverse Split

Post by hlfo718 »

No tax implication with the reverse split. So it doesn't matter if you had 100 and now is 10. Your cost basis remains the same. The only thing that might trigger a small tax gain/loss is if you had say 115 shares before the split and since they don't issue less than one share, you would wind up with 11 shares plus some nominal cash for the 0.5 share. So you have to figure out your capital loss from your basis for this 0.5 share. Otherwise, nothing really happened.
AlwaysaQ
Posts: 624
Joined: Fri Apr 13, 2007 7:37 am

Re: CitiGroup Reverse Split

Post by AlwaysaQ »

One question. What is the purchase date - when you bought the original Citigroup stock or when the reverse split occurred?
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: CitiGroup Reverse Split

Post by livesoft »

Why do you have a fee of $100 to sell Citicorp? Transfer your assets "in-kind" to a broker that gives you free commissions. Stop paying fees to use your own money.
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Topic Author
Kelty
Posts: 21
Joined: Sat Feb 18, 2012 1:12 am

Re: CitiGroup Reverse Split

Post by Kelty »

What I am hearing so far is that it will not hurt to hang on to CitiGroup
but that I could save money by transfering it to Vanguard.
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