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TerraForm Power, Inc. (TERP)

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Madison and D.E Shaw bought into TERP leverage turned into equity. Good for the stock.

 

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1 hour ago, odyd said:

Madison and D.E Shaw bought into TERP leverage turned into equity. Good for the stock.

 

What is interesting Madison owns 4.9M shares as part of the convertible $168M note.  The conversion is well over $34, the same applies to D.E Shaw.  4.9M represents 5.8% of shares outstanding.

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It hit as cash pending transaction. See it in all brokers I have. Money are available for immediate investment or withdrawal  - this may depend on the account type one has or/and its "value".

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7 minutes ago, odyd said:

I see nothing yet, an I alone?

Nothing yet for me too.

 

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The transaction takes place today, and I cannot see today, tha t is why.

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It looks like they can have more debt to support their assets. 20% more to be exact. It shows that Barclays is good to lend

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Just noticed that short interest in TERP doubled over last two weeks of November--from 6.7M to 14.8M

Perhaps this explains a bit of the price craziness there.

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Dividend question.

 

Dividend for TERP hit as RCP in description (whatever that means) instead of "dividend". This cash amount was available for immediate withdrawal/investment.  But what they have done is to adjust down (by total dividend amount) cost basis of each position still open or closed after ex-dividend date. Does it mean I will be taxed twice on this amount - once on cash they put into my account and second time when I sell positions cost basis of which were adjusted down?

GLBL has as "dividend" in description and no cost adjustment took place. Anyone knows?

 

 

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Got my TERP dividend yesterday together with GLBL, ABY and NYLD. Sweet yields.

 

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Explo, were your cost basis for TERP that you bought before ex-dividend date (11/27/2015) both still held or sold, reduced by .35 per share too? I know all US (even though no one replied) accounts are. This dividend was reported as RCP (reduction of cash position, or "initial" investment of .35 per share). What is still unknown to me if this RCP is taxable in US. I know it's reportable to IRS and if taxed it's a double taxation as gain is increased form actual gain by .35 per share by reducing cost basis by .35 per share. It will repeat with each payout.

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22 minutes ago, pg6solar said:

Explo, were your cost basis for TERP that you bought before ex-dividend date (11/27/2015) both still held or sold, reduced by .35 per share too? I know all US (even though no one replied) accounts are. This dividend was reported as RCP (reduction of cash position, or "initial" investment of .35 per share). What is still unknown to me if this RCP is taxable in US. I know it's reportable to IRS and if taxed it's a double taxation as gain is increased form actual gain by .35 per share by reducing cost basis by .35 per share. It will repeat with each payout.

Not following exactly, but I did trade it on the 11/27 but the dividend was based on the amount I held after close the day before that. 15% foreign tax was applied (I think I can deduct that later). Strangely no tax was applied for ABY. All other US and Canada listed stocks got 15% tax on dividend.

Ah, I think you mean how my cost basis of stock was adjusted for later taxing of trading gains? I don't need to pay tax for trading gains with my account. Thus I don't have to worry about cost basis. I pay tax for a fraction of a percent of my account value every year instead (sort of wealth tax). That tax rate is interest rate linked and extremely low now. If I manage to create more than 1% return I have a benefit with this type of account compare to a normal trading gains taxed account and my ambition is a bit higher than that :). The negative aspect of it is that you pay this small tax even if you lost money on trading instead of getting a deduction on your income tax. I think the minimum 15% foreign entity tax rate on dividends will be deducted from that account value based tax though, so starting to invest in dividend paying stocks has some extra benefit to lower my account tax.

 

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13 minutes ago, solarhope said:

my acc in ameritrade show the dividend as RETURN OF CAPITAL and my cost basis was reduced by 0.35 after it was sold.

Exactly. Which means that if you bought @ $8 per share your cost basis now is only $7.65. If you sell today, say @ $13, your gain is $5.35 per share instead of $5. So you will pay tax on $5.35 per share gain. 

The question I still have is if that .35 per share dividend - RCP return of capital - is taxable too? If so, then we are taxed twice on .35 per share - once when gain is realized and second time if they report this RCP as taxable gain in the US.

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A return of capital is not a dividend.  It is not taxed until you sell your shares, at which time any gain is taxed at the appropriate capital gains rate (short or long).

Per IRS https://www.irs.gov/taxtopics/tc404.html

Distributions that qualify as a return of capital are not dividends. A return of capital is a return of some or all of your investment in the stock of the company. A return of capital reduces the basis of your stock. For information on basis of assets, refer to Topic 703. A distribution generally qualifies as a return of capital if the corporation making the distribution does not have any accumulated or current year earnings and profits. Once the basis of your stock has been reduced to zero, any further non-dividend distribution is capital gain.

 

Vanguard offers an example in their explaination

https://www.bogleheads.org/wiki/Return_of_capital_distribution

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Sounds like a way to distribute earnings to shareholders at lower tax cost? Another nice thing about yieldcos seems to be that they are eligible to do this. They are a financial construct in large setup to promote growth without being held back by tax expenses. Therefore you'll often see these companies grow dividends without reporting profit and thus no tax expenses. The scheme can be debated, but joining the club on the low seems like a nobrainer (getting in on the high would have been risky, as we've seen too).

 

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12 minutes ago, disdaniel said:

A return of capital is not a dividend.  It is not taxed until you sell your shares, at which time any gain is taxed at the appropriate capital gains rate (short or long).

Per IRS https://www.irs.gov/taxtopics/tc404.html

Distributions that qualify as a return of capital are not dividends. A return of capital is a return of some or all of your investment in the stock of the company. A return of capital reduces the basis of your stock. For information on basis of assets, refer to Topic 703. A distribution generally qualifies as a return of capital if the corporation making the distribution does not have any accumulated or current year earnings and profits. Once the basis of your stock has been reduced to zero, any further non-dividend distribution is capital gain.

 

Vanguard offers an example in their explaination

https://www.bogleheads.org/wiki/Return_of_capital_distribution

Thanks. That is why they reduced cost basis. Good, no double tax. 

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3 hours ago, odyd said:

There is a description of the Invenergy acquisition

http://biz.yahoo.com/e/151221/terp8-k.html

The cash amount paid is $744M, is this form the cash account on balance sheet? I thought there was $644M. Any ideas on this?

The total consideration was paid from approximately $744 million of cash on hand, including $300 million from proceeds of notes issued in July 2015 by TerraForm Power Operating, LLC, an indirect subsidiary of TerraForm Power; and approximately $417 million from the proceeds of a new $500 million secured term loan (the "new term loan facility") entered into among a wholly-owned subsidiary of the Company, Citibank, N.A., as administrative agent and collateral agent, and the other lenders specified therein.

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My broker removed tax charge for TERP. ABY and TERP dividends have not been taxed.

 

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3 hours ago, odyd said: There is a description of the Invenergy acquisition

http://biz.yahoo.com/e/151221/terp8-k.html

The cash amount paid is $744M, is this form the cash account on balance sheet? I thought there was $644M. Any ideas on this?

The total consideration was paid from approximately $744 million of cash on hand, including $300 million from proceeds of notes issued in July 2015 by TerraForm Power Operating, LLC, an indirect subsidiary of TerraForm Power; and approximately $417 million from the proceeds of a new $500 million secured term loan (the "new term loan facility") entered into among a wholly-owned subsidiary of the Company, Citibank, N.A., as administrative agent and collateral agent, and the other lenders specified therein.

I read the same. Did you look at the BS cash?

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