Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[StealthP3D]

I would agree with you if we were talking about the US & the IRS.

but what I’m referring to is Canadian TFSA accounts that are non-taxable accounta because the money you put in them has already been taxed. Growth inside them is generally capital gains and income tax free in most cases.

the wrinkle is when something is called a “dividend” and how US withholding taxes of 15% could be applied on monies held in a TFSA. ( Canadian Tax Free Savings Account )

admittedly I am not an expert in this area, but it has me wondering

What's the penalty for holding dividend stocks in a TFSA?

“

If your blue chip stocks are U.S. dividend payers, there’s another tax issue to understand: the U.S. imposes a 15% withholding tax on dividends paid to Canadians. However, if you hold your U.S. stocks in an RRSP, this withholding tax does not apply. And if you hold them in a non-registered account, you can recover it by claiming the foreign tax credit on your return. Unfortunately, you can’t avoid the withholding tax in a TFSA.

With that in mind, it might be better to hold U.S. blue chips inside your RRSP rather than your TFSA. But again, you need to consider the big picture. If your registered accounts are not maxed out, it is certainly better to hold U.S. dividend payers in a TFSA than in a non-registered account. Yes, you will lose the withholding tax, but the remaining dividends and all of the capital gains will be tax-free forever.

—Dan Bortolotti, CFP, CIM, associate portfolio manager with PWL Capital in Toronto. “

Use common sense. It's the VALUE of the dividend that gets taxed. A stock split dividend is a zero worth dividend.

I have no knowledge of tax laws in other countries but it would asinine to tax you on the four shares you get when the very valuable share that enabled those 4 shares just lost 4/5ths of it's value. That's just common sense.

People are making this out to be more than it is. Don't get me wrong, it's a great catalyst for a bull run but that's all it is. I'll take it.

 

[Boomer19]

This was answered last night by @bhtooefr when I asked the same question : Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

i posted a whole description of due bill period here:
Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

@rdalcanto

 

[mongo]

So if the brokerage is the owner on record, it then gets 4 new shares on 8/29; and it is up to it to allocate them to BOTH A and B. Which is clearly impossible. THEREFORE *all* "notional" shares wherever they live MUST be zeroed out before the end of trading day Aug 28.

Shorting in general relies on a pool of shares with liquidity so that anyone can pull out 'their' shares is they want. Same thing as a bank that will give you 'your' cash on demand.

So 10% shares shorted before event is still 10% after event. Lender has now lent 5x the shares.
Either A or B (or both) can sell their 5x shares since the pool is large enough to support that transaction.
No need to close out anything.

What is missing is that C has a balance of -5 shares

So A has +5 B has +5 and C has -5 which totals 5 ‘real’ shares

Well, A has 0 assigned, B has 5 assigned, and C owes A 5. However, if B has a margin account also, it cloud just as well be A has 5 real and B and 0 real. It's all a pool of the brokerages assets.

THE BIG POINT (AS I SEE IT) that @Artful Dodger raises is that naked shorts do not have a 5x multiplier on the source shares (there aren't any), so they must back fill with purchased shares (or further naked shorting) post event or close out pre-event.

 

[Artful Dodger]

They wouldn't naked short if they couldn't deal with a dividend stock split in a non-catastrophic way.

Yeeah, but it was called the 'Madoff Rule' for a reason. Look how that turned out for ol'Bernie... Indeed, the 'rule' is the only thing that survived Madoff's tenure on Wall St.

Expecting Wall St to act morally/ethically/properly is a wishful excercise, one full of counter-examples. ie: 2008 sub-prime and the rating agencies. Jus' sayin'

Cheers!

 

[S3XY]

so a million shares just traded in the first minute...

No, 5 million!

 

[ByeByeJohnny]

What a relieve to live in The Netherlands where you can trade all you want all year long, but where you only get taxed 1,2% of your balance every year (the average of the balance on the 1st of January and the 31st of December). No matter how much you made (or lost) during the year! Low and simple, that’s what capital gains taxes should be like.

I know we are kinda past this now but are you really sure about this? We have similar accounts that are normally taxed like you described with a similar percentage. BUT dividends from US companies are still taxed at 15% when payed into my account. I think this is the US withholding the tax.

The problem here is that since Tesla calls this a dividend it should fall under that 15% tax deduction. A couple of our esteemed experts here are saying don't worry it's not a dividend and if it is a dividend a stock one is different than a cash one.

I hope they are right but living in a country that has had severe ongoing tax issues with a neighboring country for decades that are still unresolved hurting thousands of regular workers every year it'll take more than an expert that likely have never considered and have no real experience regarding the perils of international taxation before at their 'word'. An example. In Sweden you are taxed where you live. In Denmark where you work. Now, could that possible create a problem if you live in Sweden and work in Denmark? Tens of thousands do and have so for decades. It's still an issue. No one around here will trust that anything will be taxed in specific way when borders are involved just because it seems logical.

Imagine living in New Jersey and working in New York and both states want to tax your full income and after two decades they still haven't agreed on how to do it fairly.

Again, it really shouldn't be possible that Tesla is doing this in a way that should create a tax issue for non-US investors. So we should be safe. But I'm pretty sure at least some brokerage in some European country will manage to eff this up.

And if you are from the US and has never had any international tax issues you shouldn't really have an issue with people in Europe asking questions about this.

 

[Artful Dodger]

so a million shares just traded in the first minute...

That's 1,013,550 shares cumulative traded on NASDAQ, from 04:00 am to 09:31 am

The Opening minute saw 229,515 shares traded (09:30 ET)

Cheers!

 

[Todd Burch]

No celebrating from me today. We're just in the meat of the battle now. Today, my battle line is advancing. Yesterday, it was retreating.

We are still $125+ below where Tesla was just about the only automaker in the world to post a profit. I'm pissed about it, and I'm taking names.

It is my life's work to take money from the dirty shorts. The big guy upstairs came to me in a vision last night and told me so. I'm going to do that by accumulating more shares and holding them long-term whenever I can.

And I'm not gonna stop until my island is bigger than Krug's. Unfortunately I'm way behind, because at the IPO I didn't buy as many shares as my instincts told me I should have. I'm a little bit risk averse. Forgive me, it's my Achilles heel.

I'm a terror for the shorts. And my ugly mug is going to visit them in their nightmares. I might even terrorize Spiegel on the toilet. Not sure about that one though--it would be a little awkward for both of us.

 

[NicoV]

Hey gang,

As a Belgian, I am against the announced stock split. If they did a forward-split I'd be fine with it, but TSLA is doing a stock dividend split, i.e. for each share held an investor receives 4 extra shares in dividend.

Enter the Belgian Tax system: all dividends - stock or cash - are income which are taxed at 30% income tax. ("roerende voorheffing")

So my current TSLA stock holdings will be taxed at (80% x 30%) = 24%

I asked my broker if there is no way around this and will get an answer before August 21st. If negative, it'll be way cheaper for me to sell my entire position and rebuy in September. (Which will be taxed too, albeit lower)

Or I'd have to convert everything to LEAPS but that's a risky play.

So for once the old "buy and hold" is definitely NOT the best investment strategey.

Any Belgians (@Lycanthrope @NicoV @Cohiba ) on this forum getting info from their accountants/brokers, please share. I will too when I hear more.

EDIT: just read the @StealthP3D post saying this stockdividend is a "no value" dividend. If this is true (and it feels that way, I mean I am holding shares of +/- $1500 each and they are being reduced in value equal to the amount of stock dividend I receive) and the Belgian Tax system taxes me 30% on 0$ I'm of course fine with it. Will update if I hear more.

EDIT2: @Boomer19 clarified some things regarding the terminology used in investing on the one hand and taxation on the other hand. I am less worried but am awaiting final confirmation from my broker.

To be clear: if there are no tax consequences I'm fully on board with the stock-split. I could buy LEAPS again frivolously!

I have been through several stock splits (also reverse splits) and they have never been treated as a taxable event by my bank and have always been reported as an exchange, split, or attribution by my bank. And it’s the bank’s responsibility to deduct any taxes (roerende voorheffing), so I guess we’re ok. The bank would have to calculate the RV, but there is no value assigned to the new shares. But I am not a lawyer. For the moment, I don’t think I’m going to take any action. Except maybe to go though my historic records to see if I can find a similar split.

 

[ggr]

Will the stock split neutralise the impact of SP500 inclusion. For example, if the requirement for those tracking the SP500 is specified as having to own certain % of shares, then these firms can essentially invest less, but still meet share number ownership criteria. Since there is effectively less money being invested in the stock, the increase due to SP500 might not be as high as previously thought.

If this was the case, I can only assume that this was done at the request of the SP500 rather than Tesla. Perhaps so as to deliberately avoid SP500 inclusion sending the stock to absurd levels.

I wouldn't be surprised if the split is to make it more palatable to the S&P, either at S&P's request or just because Tesla thinks so, but I don't think it will balance out the effect of S&P inclusion, which isn't really dependent on the stock price.

My guess (nothing more than that) is that S&P requested it, and will announce inclusion this evening.

 

[M|S|M MYP]

No celebrating from me today. We're just in the meat of the battle now. Today, my battle line is advancing. Yesterday, it was retreating.

We are still $125+ below where Tesla was just about the only automaker in the world to post a profit. I'm pissed about it, and I'm taking names.

It is my life's work to take money from the dirty shorts. The big guy upstairs came to me in a vision last night and told me so. I'm going to do that by accumulating more shares and holding them long-term whenever I can.

And I'm not gonna stop until my island is bigger than Krug's.

I'm a terror for the shorts. And my ugly mug is going to visit them in their nightmares.

I would hate to see what would have happened if the 5:1 split did not get announced and the market was down today....You'd probably be in a better mood, claiming you were buying at those levels

 

[canoemore]

So, do folks think that this is just going to be a blip for the day - albeit a tall one - that will be crushed back down in the next week or so? Or does this price movement have some legs? I'd like to think that with SP500 addition lurking in the shadows, and with Battery Day close on its heels, this might signal a change in momentum. But the last 2 weeks I've felt like Charlie Brown missing the football each time I see a brief rally.

 

[neezer]

TESLA analysts and shorts finally got it right: Tesla is indeed going to $300 again...it’s just that it took a 5:1 stock split!

 

[StealthP3D]

Yeeah, but it was called the 'Madoff Rule' for a reason. Look how that turned out for ol'Bernie... Indeed, the 'rule' is the only thing that survived Madoff's tenure on Wall St.

Expecting Wall St to act morally/ethically/properly is a wishful excercise, one full of counter-examples. ie: 2008 sub-prime and the rating agencies. Jus' sayin'

Cheers!

I'm not saying MM's haven't abused the naked shorting rules - obviously they have and they do. And this is disrupting them right now. But most short sellers have borrowed shares as required and this won't affect them except for the price rise caused by the split. Which is bad enough.

The naked shorts are another problem but something tells me they will survive. They have risk departments that calculate how much it will cost them to deal with events like these.

 

[Rotte]

Elon Musk Splits Stock, Makes Tesla's Case to Join Dow Jones | The Motley Fool

 

[StealthP3D]

So, do folks think that this is just going to be a blip for the day - albeit a tall one - that will be crushed back down in the next week or so? Or does this price movement have some legs? I'd like to think that with SP500 addition lurking in the shadows, and with Battery Day close on its heels, this might signal a change in momentum. But the last 2 weeks I've felt like Charlie Brown missing the football each time I see a brief rally.

TSLA was too cheap before this announcement so I think this rally has legs overall.

 

[Todd Burch]

I would hate to see what would have happened if the 5:1 split did not get announced and the market was down today....You'd probably be in a better mood, claiming you were buying at those levels

Fortunately I have a few $300 bills sitting around so I can buy a few shares after the split.

 

[Gwgan]

why would Tesla choose this method over a traditional split?

Several pages back the language from laws in Delaware and California was posted to highlight the difference. Tesla is incorporated in Delaware and they use share dividends. However, the last sentence "No such designation as capital shall be necessary if shares are being distributed by a corporation pursuant to a split-up..." implies this is a non-event as nothing of value is given.
Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

Should I hold off buying more shares until after the split?

Decide based on your future value estimate as always.
No. The split is transparent to the buyer. What you buy before 8/21 will go up in number and down in per share price but the value will be the same (in a flat market). What you buy after 8/21 will have the same final value and number of shares.
Yes. You think the value of dollars you invest today will be worth less on 8/31. History gives bad odds on that choice but the market can surprise.

 

[lafrisbee]

OK..I am SURE ALL OF US WANT TO KNOW WHAT I AM CONCERNED ABOUT...
Did I find something. You know the blind hog finding an acorn (most people in the 20th century did not understand the saying so I am sure a small fraction of you all will. Hogs used to be herded/moved like sheep to better food sources. The most insane such practice was during the Massacre of the American Bison. Originally the Bison was killed and "slaughtered just for its tongue. These were cut out, salted, and sent back to the East. The Buffalo was left to rot. Industrious people would buy herds of piglets in the East, take them to the West, and herd them in behind the buffalo hunters. The Hog herders would split the bison open and the piglets would soon become hogs by eating on the high quality protein. Now the saying developed because the same principle was applied to the Acorn crop which was more massive than you can imagine before the deforestation of the USA)
SO MY MUSINGS were focused on the fact that the 4 shares become the property of the "owner" of the original share. Could this be done to let the Shortz get out of their position by only having 1/5th the liability? Or at most to only pay a penalty of 20%(the value of one share) to quit messing with TSLA?
I do not see a clear path for that to happen, but I do not see, nor has it been explained why the Board of Directors are using the "Dividend" gambit instead of just a stock split.
Can someone email Hiero and ask him to do a Q&A with the ludicrous group on YouTube?

 

[Cobbler]

I have been through several stock splits (also reverse splits) and they have never been treated as a taxable event by my bank and have always been reported as an exchange, split, or attribution by my bank. And it’s the bank’s responsibility to deduct any taxes (roerende voorheffing), so I guess we’re ok. The bank would have to calculate the RV, but there is no value assigned to the new shares. But I am not a lawyer. For the moment, I don’t think I’m going to take any action. Except maybe to go though my historic records to see if I can find a similar split.

What if you have sell orders open? Do they also convert automatically? (using Keytrade & Binckbank)