I had a financial advisor approach me with this scenario and I did not know how to answer.
They have a client who has a number of shares in a thinly traded but volatile ~50 cent stock. On the last day of the year the stock price doubled before dropping back down again a few days later. This seems like price manipulation, although it is impossible to prove it.
Where this becomes an issue is that because of the RMD situation, it doubles the distribution and causes more of a tax hit. The custodian's hands are tied and they can only report the public value as of 12/31. Is there any way to report something different to the IRS. The general rule of thumb for asset valuation is “the price at which the investment would change hands between a willing buyer and a willing seller, neither of whom were under duress.” This client would not have been able to trade the stock as there likely were no willing buyers.
Any ideas or are they stuck?
Thanks!
They have a client who has a number of shares in a thinly traded but volatile ~50 cent stock. On the last day of the year the stock price doubled before dropping back down again a few days later. This seems like price manipulation, although it is impossible to prove it.
Where this becomes an issue is that because of the RMD situation, it doubles the distribution and causes more of a tax hit. The custodian's hands are tied and they can only report the public value as of 12/31. Is there any way to report something different to the IRS. The general rule of thumb for asset valuation is “the price at which the investment would change hands between a willing buyer and a willing seller, neither of whom were under duress.” This client would not have been able to trade the stock as there likely were no willing buyers.
Any ideas or are they stuck?
Thanks!