I'm no tax accountant, but this is what I read in the VOD prospectus . Here is the important stuff:
"The Special Dividend which will consist of cash and the fair market value of the Verizon Consideration Shares will constitute a dividend for United States federal income tax purposes----"
"Vodafone currently expects that its current and accumulated earnings and profits will exceed the amount of the Special Dividend and therefore the entire amount of the Special Dividend will be treated as a dividend for United States federal income tax purposes without any offset for your tax basis in your Ordinary Shares"
The combined value of the cash + the shares is ~~$17 PER SHARE. ( figure stated in a cover letter) This will create a big increase in taxable income for 2014 for even the smaller share owners.
I would truly like a person with a TAX background to confirm all this, as I'm seriously thinking of selling out my shares to avoid a big jump in taxable income for 2014.
It would go like this: SELL now @ ~~ $40, BUY back at ~~$23 after the transaction ?.
You can find this tax info in Section 3, page 95 of the VOD prospectus, Assuming you received it. I was not able to find in on the internet, but did not try real hard either.
There is going to be a reverse split so the shares will not be $23. The shares will be nearly the same price and likely just a freckle higher. Outstanding shares will be nearly halved at a factor of .52 (or 52%) after the split. It might be prudent for those holding outside a Roth or 401k to avoid the tax liability but one also runs the risk of T popping the proposal while you sit on the sidelines. Going to be a real interesting couple days going into the divy date along with post divy.
The reverse split is irrelevant to this discussion, because it complicates things.The real point to your comment is that the post transaction value will (hopefully) "be nearly the same" . So by selling NOW you would end up in the same place financially as if you were to wait for all the fancy paper shenanigans to take place. The T thing really strikes a raw nerve with me, they would do it just when everybody is in an uncertain mood.