Long time follower of this board, but don't usually post. Any good link to the tax treatment of this? Might be better to sell to get a long term capital gain and buy the shares back 31 days later if the spinoff will be treated as ordinary income. Could some of this be considered just a return of capital. I hope we get this info pretty soon.
A couple of things. The tax treatment will probably include some return of capital unless there is a whole lot of taxable income generated. And with respect to the 30 days for wash sales rules, it really only relevant for losses. So if you have a gain, you can buy back in whenever you want. The gain WILL be recognized.
My thought: this is a taxable dividend distribution... the amount in excess of the company's taxable earnings is ROC for the stockholder up to the stockholder's cost basis and anything above that would be a capital gain for the stockholder.
example: NCT has 1.00/share taxable earnings in 2013.
They distribute $0.88/share in cash and 1 NRZ share @ $5.00 (value TBD but $5 used as an example). NCT therefore distributed a total of $5.88. $1.00 is dividend income, $4.88 is ROC.
Dividend/ROC split will not be determined until the end of the year based on taxable income.