After talking with my wife about this, she reminded me of a very important fact. The Bush tax credits are set to expire on Dec. 31. At that time, the tax rate on dividends will jump from15% to more like 40. And the Obama care will be part of that increase so I do not think this is likely to be extended.
With this in mind, I think the one percenters who run FIG et.all. will do their best to take care of the rest of the one percenters who invested hard won capital into this enterprise.
In taking the above into consideration, along with FIG's current operations and forward looking plans, I believe that the top off will be considerably more than my wild-eyed overly optimistic opinion of 50-60 cents.
Double it for the tax implications alone.. They'll front-end load the dividend now and not do a quarterly dividend increase in 2013 and not leave anything to chance.
Same thing with NCT and the rest.
I am long the stock and really long on the options.
we do pay taxes in the year we receive $ as individuals and owners of c corps - but not for pass-through entities (partnerships, LLCs, s corps, sole proprietorships). FIG is a partnership.
as far as the IRS is concerned, partnerships don't exist - so when FIG receives taxable earnings it is immediately as if each of us has already received the money - we already owe the taxes even if the cash stays in FIG's bank.
our K1's will look the same next year whether FIG distributes zero dollars or every dollar on its balance sheet. so the good news for you on that is 2012 tax law will apply to all of FIG's 2012 earnings, regardless of if/when FIG distributes the money.
I've had my eye on FIG for a while now (own NCT), so I finally got the money together to buy up a small amount of FIG. Only a couple of thousand shares to start, but I like where FIG and NCT are going. Wish I had done this months ago at a lower price, but oh well. My saving grace is that I was buying up NCT instead when it was trading below $4.
Irrespective of tax consequences, look at that little figglet run! I am so glad I was greedy when the Skeleton gang was looking into the cauldron and preaching gloom and doom. Up another 3.5 percent on a flat day on good volume. Once it breaks through 4.5, it shows up on all the new high/IBD screens to bring in another round of nitwits to really get the party started. Not too late for the Skeleton crew to get it right and get long (even though they have missed a 40 percent stock move already).
Don't we pay taxes on $$ in the year we receive it? Not when it's announced but when we get it?
What is the current tax rate for 2012 relating to capital gains and dividends? What will be the proposed tax rate in 2013?
How many shares does Nardone, Wes Edens, the rest of the BOD, insiders, family and friends of these guys do you think they hold?
Let's just say I agree with you as to FIGs tax status. I'm concerned more with MY tax status. I would rather pay it now at this rate than at the proposed higher rate. I would think that FIGs management (shareholders) would agree with me on this one.
They could still close out the books as far as the top off at the end of the third quarter and close out the books for tax purposes on Dec. 31. Whatever extra they make in the 4th quarter could be paid in the form of a dividend increase or saved until the next top off.
There are lots of options available and these guys running this show are by no means stupid.
1. Your wife is wrong, the healthcare act has absolutely nothing to do with the expiration of 2003 tax cuts.
2. The tax rates go to what ever your income bracket is not "40 some %". With your deductions the actual rate is much less than the nominal rate.
3. The top up div. will be paid in 2013 not this year.
4. As for amount of top up, it won't be more than the amount of DE for the year and most likely only 50-75%. As of last CC management would only say it would be up to the board at the time to decide on amount of DE to pay out.
there is no tax effect to FIG (or us) of retaining v distributing earnings. it is a partnership and is not taxed - we are taxed for its earnings regardless of where they reside.
these guys are tax-efficient, but not obsessed. this is a cash-on-cash business - internal rate of return is the beginning and ending of it. if you're making 15 or 20% on your money the marginal tax rate is an afterthought. if you're making 0% on your money no tax strategy can save you.
I agree with all of you a little bit. NCT is not going to do a big dividend payment at year end. In fact they probably need to raise more money assuming they get the Rescap deal.
Bob thinks, I really don't agree, that FIG is going to do a huge distribution of the cash on the balance sheet before year end. They have around $2.50 after the RA deal and could easily throw out a $1.00 or $1.50 if they wanted to. It just depend on how much cash they feel they need to retain on the balance sheet.
It should be interesting but I am not selling until the announce the year end top-off. I suspect what they do will also be influenced greatly by the elections.
>> Same thing with NCT and the rest. <<
Not sure what you mean by "same thing with NCT." NCT is a REIT and does not qualify for the 15% tax rate. And there is no way that NCT could bump up the dividend much without having ROC. IMO: The logic does not apply to NCT. They might try to get the pps higher for another offering, but that's a different argument.
I hope you are right but I think you are wrong. The highest top off I could possibly be would be 50 cents. Not sure that obamacare tax would apply to fig distribution as FIG is a partnership.
The phrase you are looking for is "unearned income". Whether it is capital gains, dividends or interest, under the plan which will take place when the Bush cuts expire is "unearned income".
What part of what FIG does is "earned income" that applies to you, me, or any of the rest of the limited partners who have an equity interest in this enterprise?
Otherwise, beginning Jan 1, if FIG pays out 5 cents or $5.00, we get hosed to the tune of 40%
Look at the number of shares the insiders hold. They are not going to screw themselves by being liable for paying 150% more in taxes by waiting until next year to do dividends of any kind - top offs, regular or anything.
On my last post I reported I am long the underlying security. I also reported I am really long the calls. On Monday, the x date, I'm getting more long the calls.
I've wrong before but not this time.