I was recently involved involved in a spinoff taxable event at the end of Dec 2022. It involved META preferred shares that received 1:1 stock in a spinoff company Next Bridge. The preferred shares (ticker was deleted) due to corporate action and the new common shares I received in the Spinoff are private and have no value assigned at this time. This share exchange from the spinoff will not show up my 2022 1099 per my broker because the private shares have no value, and I did not sell any of my preferred shares prior to the spinoff, but yet the spinoff itself is a reportable event for my 2022 taxes. How and where would I report this as a share exchange on my taxes? Where am I supposed to come up with a fair market value of these private shares?
I reached out to the META the parent company who spunoff the new company Next Bridge for any addition information regarding tax and this was their reply:
META INTENDS TO COMPUTE A VALUATION FOR THE COMMON STOCK DISTRIBUTED IN THE SPIN-OFF. TO DO SO WILL REQUIRE META TO COMPUTE ITS EARNINGS AND PROFITS FOR 2022 FOR TAX PURPOSES. THIS WORK, AS INDICATED IN PAGE 31 OF THE PROSPECTUS IS LIKELY TO REQUIRE UNTIL AFTER U.S. HOLDERS FILE THEIR U.S. TAX RETURNS. META STRONGLY RECOMMENDS THAT ALL RECIPIENTS OF THE NEXTBRIDGE COMMON STOCK SEEK ADVICE FROM THEIR TAX ADVISORS WITH REGARD TO ESTIMATING THE VALUE OF THE COMMON STOCK RECEIVED IN THE SPIN-OFF SINCE, AS STATED ON PAGE 30 OF THE PROSPECTUS, ANY VALUE ASCRIBED BY META IS NOT BINDING ON ANY TAX AUTHORITY.
THE WORK REQUIRED TO ASCRIBE A VALUE TO THE COMMON STOCK IS COMPLEX AND TIME CONSUMING. IT IS UNCLEAR WHEN THIS WORK WILL BE COMPLETED BY META AND ITS OUTSIDE ADVISORS. META NEEDS THESE DATA BY THE EXTENDED DUE DATE FOR ITS US TAX RETURNS WHICH OCCURS IN SEPTEMBER 2023. IT IS STRONGLY ADVISED THAT RECIPIENTS OF THE COMMON STOCK SEEK GUIDANCE FROM THEIR TAX ADVISORS WITH RESPECT TO THE APPROVAL TREATMENT OF THE DISTRIBUTION.
The link to their prospectus- tax info starts on bottom of Pg.30
https://www.sec.gov/Archives/edgar/data/1936756/000119312522292114/d302576d424b4.htm
Any assistance on how to handle is appreciated!!
Thank you
