Valuing Russia shares for IRA roll-over

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Topic Author
Cantrip
Posts: 116
Joined: Fri Oct 16, 2015 7:21 am

Valuing Russia shares for IRA roll-over

Post by Cantrip »

Last year I speculatively purchased a couple chunks of Sberbank shares (the largest Russian bank) when its price fell heavily after the Russian invasion of Ukraine.

The total number of shares purchased was 27,740 ADRs. Each ADR share is worth 4 Russian shares, for a total of 110,960 ordinary shares on the MOEX exchange. The price today is 172 rubles/share, which at an exchange rate of 0.013 rubles/dollar is $2.24/share.

In summary:
Purchase Price: ~ $80,000
Current Russian Price: $248,000
US Market Price: $0

The shares were purchased at Merrill Edge and when Sberbank became sanctioned, the shares were transferred to the OFAC (Office of Foreign Assets Control at the Treasury Department). No one except the US Government can access the ADRs. However, JP Morgan who created the ADR is trying to cancel the ADR. If this happens the shares would be sold onto the Russian Exchange. Russia will likely only allow the shares to be sold at 50% of value and will also likely assess a 10% Ukraine war tax. There would be about another 10% of fees as well, and so total return from $248,000 would be (248)(0.3) = ~$74,000 if I leave the shares alone.

While the ADR shares are located at the OFAC, the underlying shares which the ADRs point to are now located at Raiffeisen Bank in Russia. I can have Raiffeisen Bank cancel my ADRs, and move the underlying shares to a brokerage account in Russia under my name. I will not be allowed to trade the shares, but at least in this account I could collect dividends in Russian rubles (the ADRs are not allowed to currently collect dividends).

The question I have, if I transferred the shares into a Russian brokerage account (a type C non-resident account) would this be considered a Roth distribution (there are no Roth accounts in Russia)? If so, what is the value of these shares? Whatever it is, I would like to use the 60 day rollover rule to put the equivalent amount of money back into my Roth. Should I use the purchase price of 80k, possible realized value of 74k, current US market value of 0, or the Russian value of 248k?

Thank you for any guidance on the valuing of these shares for IRA roll-over purposes.
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