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Aon plc Message Board

  • blingbling_thang blingbling_thang Feb 1, 2012 2:42 PM Flag

    Capital Gains

    I find it surprising that this board, which presumably is predominately populated by shareholders, current or prospective, has not discussed the capital gains implications of the proposed headquarters move.

    The manner in which the move is planned will trigger a taxable event for shareholders, at least those that are US taxpayers. The difference between the share price at the time of conversion and the cost basis of your holdings will be considered a capital gain by the IRS. That gain, furthermore, cannot be offset by losses that may have been incurred elsewhere by the shareholder.

    The net/net is that virtually all individual shareholders will have to cut a check to the IRS next spring (although the transfer agent that exchanges the 'Aon US' for 'Aon UK' shares might very well require the account holder to put down a withholding payment in order to get the new certificates, but this is new territory for me). I would think Pat Ryan, in particular, will have a hefty 2012 tax bill. This forced sale and associated cap gains is the US government's way of discouraging the cross-border transfer of incorporations.

    For a more lucid explanation:

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    • Good points, missed that. So you have cancelled out Reason # 2, that leaves only those executive seats for Manchester United. LOL.

      BTW - how goes the PASS IT ALONG program?

    • The analysts who cover Aon stock didn't ask many questions about the redomestication in today's earnings call. Wouldn't you think that this capital gains issue would have been something worth addressing? Especially as some, perhaps even Mr Ryan, may sell shares to pay the IRS?

      I'm not sure that the management was even aware of these implications before they decided to jump ship from the USA.

      And if redomestication was the right course, why not incorporate in Dublin or Switzerland, where the tax is lower than in the UK?

      All of this appears to be poorly thought out.

    • You raise an excellent point. When I heard about this after the deal was announced I was very surprised.

      I also heard that it was publicized in the Chicago press that two Aon board members abstained on the resolution to move the headquarters. I found this "news" quite revealing on two counts: (1) the merits and (2) that such board actions would be leaked. Clearing this was an action that generated much internal debate.

    • The mistake you made was assuming this board is mostly stockholders.

      Read the comments. Most of the poeple here appear to be angry ex-Aon employees. They sold their stock along time ago because of need or spite.

      Don't get me wrong as stated in other posts I am an ex-Aon employee who was laid off in 2009. Just not the angry kind.

      I also hold all of my Aon stock in the Aon 401(k) plan so when I cash my stock in it will all be ordinary income except for the portion on the Roth 401(k).

      But I agree with you it will be interesting to see if there is a stockholder "no" vote on paying taxes or not. I suspect the mutual funds figure they will pass the taxable gains on to their holders who get those every year so they won't notice the difference.

    • Good points indeed.

      On a different note, having outsourced as much of the employee and IT base as he could, Greg Case is now outsourcing Chicago.

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