|
Posted by 704set on April 25, 2006, 7:49 am
Please log in for more thread options > 704set wrote:
>> CVC is paying a special dividend of $10 this week. The
>> dividend will be a return of capital, thus there is no tax
>> consequence.
> Not quite correct about "no tax consequence". That would
> only be true if the ROC is LESS than the current basis of
> the stock.
>> But the stockholder's cost basis will be
>> reduced by $10.
> True, only if the cost basis is greater than the ROC
> payment. You can't reduce cost basis to less than zero.
>> My question is what is your new cost basis if you paid $8
>> for the stock?
> $8 of the ROC payment will reduce the cost basis to zero.
> The other $2 is taxed as capital gain (even though you don't
> actually sell the stock).
>
> End result, there ARE tax consequences!
Thanks, everyone.
704set
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap