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Capital Gains Tax - Corporate Spin Off

  • 17-09-2020 06:36PM
    #1
    SamByrne95
    Registered Users, Registered Users 2 Posts: 4 ✭


    Hi all

    Recently a company I own enganged in a corporate spin off where I recieved a preference share in a newly formed company. I'm not quite sure how this is dealt with for capital gains tax purposes would love to hear your thoughts?

    Here's the details:

    Prior to the spin off - I owned 53 shares of Qurate Retail Group Inc which I purchased for $9.45. Just before the spin off the shares traded at $10.94 (at close)

    Immedietly after the spin off the shares fell to a price of $6.16 (at close). I still retained 53 shares but I also got 1 preference share in the newly formed company for nill consideration. The face value of the preference share recieved was $100.

    Details of the spin off can be found at the Qurate website in the investor relations section. Boards will not allow me to post a link as I'm a new user.

    Would appreciate any input. In addition, I understand this thread is strictly for discussion and educational purposes only. I will not take any replies as tax advice.


Comments

  • #2
    Calahonda52
    Registered Users, Registered Users 2 Posts: 12,948 ✭✭✭✭Calahonda52


    looks to me that the only thing that has happened is that you have acquired a pref share at nil cost, valued at 100.
    Are the prefs listed?

    You still have the 53 bought at 9, now trading at 6, so a paper non crystallised loss

    “I can’t pay my staff or mortgage with instagram likes”.



  • #3
    SamByrne95
    Registered Users, Registered Users 2 Posts: 4 ✭SamByrne95


    Yeah pref shares are listed.

    I thought it would of been a similar tax treatment as that of bonus shares where they form part of the original holding for FIFO purposes but considering the shares are of a different company and class I doubt it. I know there's been special considerations revenue have posted in relation to Fyffes spin off but not quite clear


  • #4
    Calahonda52
    Registered Users, Registered Users 2 Posts: 12,948 ✭✭✭✭Calahonda52


    SamByrne95 wrote: »
    Yeah pref shares are listed.

    I thought it would of been a similar tax treatment as that of bonus shares where they form part of the original holding for FIFO purposes but considering the shares are of a different company and class I doubt it. I know there's been special considerations revenue have posted in relation to Fyffes spin off but not quite clear
    I don't know, maybe the prefs reduce the base cost of the 53

    “I can’t pay my staff or mortgage with instagram likes”.



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