Hello all. I have been attempt to help my retired in-laws with organizing and simplifying their portfolio and hoping for some assistance from the knowledgable crew here.
After a long process of cataloging all of their investments and brokers, we are finally working on an action plan. One of the particularly difficult investments to dig through was what was originally purchased as a non-traded REIT. They had no idea what it was or even how they obtained it. They think it may have been inherited and/or purchased through a former financial advisor they used.
Best guess, it was purchased or inherited around 2005/2006. I found one statement they had from the end of 2006 with share totals and price - Inland Western non-traded REIT. Further research showed that they had a liquidity event in 2012 in which the REIT was rebranded as Retail Properties of America, Inc (RPAI) which was NYSE listed. At this time, a complicated transaction occurred where “RPAI essentially effectuated a 2.5-to-1 reverse stock split and phased-in liquidity program”. That and the IPO price effectively made the asset worth about 1/3 of its previous value. RPAI later (2021) merged with KITE REIT (KRG) to complicate things further.
As part of a bigger plan to simplify their portfolio, we want to sell these REIT shares. The good part is that now they are just simple exchange traded shares (KRG) with no liquidity complications. The complicated part for me is to understand the tax implications. I know the value of the shares and share price in 2006. Everything I have read indicates that the NAV was stable at $10 before the liquidity event in 2012. The current market value now is down 50+% from that total value in 2006. Can we use this 2006 non-listed value as a good faith estimate for the tax cost basis and use that harvested loss or does the cost basis have to be reduced in line what happened with the shares at the liquidity event and public listing?
Here is an example to help illustrate (real amounts are significantly more):
YearHoldingsharesshare price*total valueStock Conversion
2006Inland Western1000$ 10.00$ 10,000.00
2012RPAI352.35$ 8.00$ 2,818.810.4
2021KRG219.51$ 20.32$ 4,460.540.623
*share price at purchase/conversion
Any help or guidance would be much appreciated. On a side note, I am an IT Engineer but started my career right out of college at Vanguard. I met Jack Bogle on several occasions and still invest by the principles he instilled in me back then.
Liquidity Event details - https://inland-investments.com/inland-western
https://www.investmentnews.com/industry ... -dud-43457
Inland pricing details - https://www.sec.gov/Archives/edgar/data ... 1424b3.htm
After a long process of cataloging all of their investments and brokers, we are finally working on an action plan. One of the particularly difficult investments to dig through was what was originally purchased as a non-traded REIT. They had no idea what it was or even how they obtained it. They think it may have been inherited and/or purchased through a former financial advisor they used.
Best guess, it was purchased or inherited around 2005/2006. I found one statement they had from the end of 2006 with share totals and price - Inland Western non-traded REIT. Further research showed that they had a liquidity event in 2012 in which the REIT was rebranded as Retail Properties of America, Inc (RPAI) which was NYSE listed. At this time, a complicated transaction occurred where “RPAI essentially effectuated a 2.5-to-1 reverse stock split and phased-in liquidity program”. That and the IPO price effectively made the asset worth about 1/3 of its previous value. RPAI later (2021) merged with KITE REIT (KRG) to complicate things further.
As part of a bigger plan to simplify their portfolio, we want to sell these REIT shares. The good part is that now they are just simple exchange traded shares (KRG) with no liquidity complications. The complicated part for me is to understand the tax implications. I know the value of the shares and share price in 2006. Everything I have read indicates that the NAV was stable at $10 before the liquidity event in 2012. The current market value now is down 50+% from that total value in 2006. Can we use this 2006 non-listed value as a good faith estimate for the tax cost basis and use that harvested loss or does the cost basis have to be reduced in line what happened with the shares at the liquidity event and public listing?
Here is an example to help illustrate (real amounts are significantly more):
YearHoldingsharesshare price*total valueStock Conversion
2006Inland Western1000$ 10.00$ 10,000.00
2012RPAI352.35$ 8.00$ 2,818.810.4
2021KRG219.51$ 20.32$ 4,460.540.623
*share price at purchase/conversion
Any help or guidance would be much appreciated. On a side note, I am an IT Engineer but started my career right out of college at Vanguard. I met Jack Bogle on several occasions and still invest by the principles he instilled in me back then.
Liquidity Event details - https://inland-investments.com/inland-western
https://www.investmentnews.com/industry ... -dud-43457
Inland pricing details - https://www.sec.gov/Archives/edgar/data ... 1424b3.htm
Statistics: Posted by permesso — Wed Jan 24, 2024 5:30 pm — Replies 0 — Views 50