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# Corrections Corporation of America Message Board

• newMK newMK Nov 10, 1999 10:50 AM Flag

## Another tax trick

Just when you think you know what's going on, the
good old Internal Revenue Code provides a
surprise.

All this time we've been thinking about how and how
much with regard to the special dividend that will pay
out the balance of old CCA's accumulated earnings and
profits by 12/31/99. Now we find out that with the
"regular" q4 dividend, it will already be paid, because for
tax purposes payments are TREATED AS FIRST COMING OUT
OF ACCUMULATED E&P (I guess this is unique for
REITs). Thus the 95% of current year taxable income
sometime in 2000!!!

REALLY confusing, but a net
positive as they now have more flexibility. A bit late in
figuring this out, though. Where were the multi-million

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• I am a bit confused and hope someone can
help.

Point 1:
The balance sheet at 30 Sept
shows:
Distributions payable = 209,729
Using 114003 Shares I get
\$1.84 per share.
Since the 3Q dividend was paid by
30 Sept and no other dividends have been declared I
assume this \$1.84 per share is the provision for the
balance on the Special Dividend.

Point
2:
Normalized earnings for 9 months come out at \$1.42 (ie \$1.90
for the year).The 95% rule means that 1.90 x 95% =
\$1.80 Minimum dividend to maintain REIT
status.

HOWEVER actual earnings YTD are only \$0.70 (ie \$1.09 for
the year). I assume the 95% rule applies to actual
earnings so minimum dividend to maintain REIT status for
1999 = 1.09 x 95% = \$1.03 only!

Point
3:
Total dividends payable inc balance of Special = 1.84 +
1.03 = \$2.87
Dividends paid to date in 1999 = \$0.55
x 3 = \$1.65
Dividend still payable =
\$1.22

Since dividend payments are applied to special first
and normal second, from the above amount we have only
1.84 - 1.65 = \$0.19 of special left to pay
out!

Can someone please check my assumptions and let me
know if I am right or wrong.

Many Thanks.

• I missed the call (sick kid) but from the posts I
think I have a good grasp of what was discussed. A
question - given the fact that the short-term pressure to
fund the Special is off, why did we go through this
big hoopla with finding a strategic investor? Is the
company actually implying that they just figured this
latest tax thing out this week?

Did they take any
questions from Analysts? If not, seems that they should
have just put out a memo.

32.86-0.09(-0.29%)11:06 AMEDT

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