I received the proceeds of 13 AIB shares, having opted to sell these under the scheme announced by the bank for small shareholders some time back. The shares represent a huge dilution of the original shares which were acquired over many years between the early 1990s and roughly 2007.
Would you know how I would go about calculating the capital loss on these shares in case I need to offset gains somewhere else? Some of the shares may have been acquired by way of scrip dividends, which adds to the complexity.
Mr G.D.
This is where investors need to hold on to good records in relation to when and where they put their money. We all overrate the powers of memory, especially in a case like yours where there are multiple share purchases over many years.
Without records, you can either find yourself in trouble with Revenue over capital gains tax unpaid or lose out on losses that can be used to defray capital gains on the sale of other assets. No one should get rid of their records until they have entirely divested of stocks in particular companies – or other investments – and squared things up with Revenue.
Even then, Revenue requires you to hold on to record for six years after the year the tax return relates to.
As you say, those €13 shares, for which you received the paltry sum of €73.45 when AIB earlier this autumn offered to buy back the holdings of any investor with fewer than 20 shares in the bank, were just a fraction of your original holding. The magic number of 20 was chosen apparently because anyone with fewer shares than that would pay more in stockbroking charges to sell them that they were worth at face value.
You’re talking about transactions over 17 years here, so I really do hope you kept the related paperwork
Back in 2015, the bank organised a share consolidation which saw every shareholder receive one new share for every 250 they owned at the time. So your 13 shares would originally have been 3,250 shares in the bank.
The €5.65 a share offer – a 5 per cent premium to the market price – was simply the final insult in an investment that has proven catastrophic over the past 14 years.
Those 250 shares that would have been worth €17.50 just before the consolidation announcement, and €8.75 on the last day the old shares traded on December 18th, became a single share which was worth €8.50 at the close of trading on December 21st. However, those 250 shares would have been worth just shy of €6,000 – €5,987.50 to be precise – at the pre-crash peak.
Multiply that figure by 13 to get the value of your shareholding at various points along the way. At peak, your holding would have been worth not far short of €78,000.
But the key for you is the price at which you acquired each set of the shares. For the scrip dividend shares – shares given in lieu of cash dividends – the price is the value at which the shares were trading when the shares were issued to you.
If, for instance, you bought on March 7th, 2006, at the €18.98 a share the bank’s stock was trading at, each share bought that day would now be worth 1/250th of the €5.65 you got in the odd lot buyout. That’s 2.26 cent. So your loss on that day’s trade is almost €18.96 per share.
No one should get rid of their records until they have entirely divested of stocks in particular companies – or other investments – and squared things up with Revenue
You need to go back through your records – or contact your broker who should also have records of your dealings in the shares – for the relevant dates, and strike prices at which shares were acquired. Allowing then for the 250:1 consolidation, you’ll be able to assess your loss or, less likely, gain on each transaction.
If you did not have a broker, some companies (or their share registers) are helpful in providing share prices if you can give them the dates they were acquired. But it is a time-consuming process, and not one on which you can count for support.
You’re talking about transactions over 17 years here, so I really do hope you kept the related paperwork. If not, it is quite likely that you will miss out on the opportunity to use losses accrued on this investment against any other asset sale gain – because you will not have the necessary detail for a tax return when you are looking to offset the losses.
You would not even have the transaction dates even if you could track down the share price – for instance, in old Irish Times print records of daily stock market coverage.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
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