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17-09-2020, 18:36   #1
SamByrne95
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Capital Gains Tax - Corporate Spin Off

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.
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18-09-2020, 07:05   #2
Calahonda52
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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
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18-09-2020, 11:27   #3
SamByrne95
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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
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18-09-2020, 17:16   #4
Calahonda52
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Quote:
Originally Posted by SamByrne95 View Post
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
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