Those who own CLNH need to consider the following possibility:
1-CLNH distributes income on a K1, which was OK when they paid a cash dividend. Now that (ghost) income is without a cash dividend, which also increases tax basis. CLNH does NOT pass the tax loss carryover to investors.
2-CLNH reported $2.68 EPS for Q12010. Annualized is $10.72 (4X).
3-Example for 20K shares purchased at $.20 for $4,000, held 12 months, sold at $.45 for $9,000, and profit of $5,000. You also may have to report and pay tax on (ghost) income of $208,400 (20,000 shares X $10.72). You can add the $208,400 to your cost of $4,000 for a capital loss of $199,800. But you can only deduct $3,000 per year from other income. Some losses might reduce this, but the exposure is staggering.
What is wrong with this analysis?
Can you afford to own CLNH?
Will Ross who owns mostly preferred shares receive a share of income on preferred? Did he stick it to common shareholders again by making them pay tax on earnings while he retains voting control?
Would a company screw their shareholders in this way? CLNH would.
Wow! so please help me out here with this subject...
Bought 12500 shares of CLNH @ .155 on 1/12/10
Sold 12500 shares @ .355 on 3/16/10
Held for just over 2 months.
If what youre saying is true on how CLNH does things, what would the tax implications be on this figure??
That depends entirely on the K-1 that you get from CLNH as of 12/31/10.
If as I suggested CLNH allocates a large amount of income (that you did not receive as there is no dividend), your tax basis will be significantly increased so that you have a large capital tax loss due to a tax basis much greater than your purchase price. If that exceeds your other taxable gains, you can only deduct $3,000 of the capital loss against other income each year.
The worst part is that you may have to pay tax on the 2010 income that CLNH allocated to you.
I cannot say that will happen for sure, but I believe it is a definite possibility, enough so that I may make an extra tax deposit to cover the possibility.
We will not know for sure until we get the K-1, and I doubt that CLNH will tell you now, even if asked at the CC. They will dodge any such question as: "ask your tax advisor." Who can predict without that K-1?
Don't rely on these amateurs for tax advice.
First, even if they are well intentioned, they often don't know what they are talking about. Second, they may not be well intentioned and may be trying to alarm investors in order to drive the stock price down.
If you want advice, go to a reputable accountant or tax advisor.
I am sorry that you just do not know what you are talking about.
Reference the 12/31/09 10K, page 26 of 48 showing those with 5% or more voting shares (=voting control) as follows:
C-III (Farkas) 38.7%
"60 Columbus Cirle"
address (=Ross, Related,
& friends-Blau, Beal)50.5%
The old management (Ross and friends) control more of the voting share than Farkas.
If you do think some of their numbers do not make sense and that this is a black box with lack of transparency that is confusing to shareholders, complain to CLNH- not me. These are their own numbers.
Virtually all that income is from reversals of reserves that they booked as losses in the past, which they didn't pass on to shareholders. Can they really pass that income on to us when they reverse a loss that they didn't pass on to us? I'm not an accountant, but this wouldn't make any sense to me. And if they do pass it all on, I could be ruined, since I have a very large amount of low-priced shares. If such is allowed, it could allow a malicious company to alternatively book loan-loss reserves and then reverse them, just to screw the limited partners. It's hard for me to believe that is legal.
When I considered the possibility, I decided to dump my shares to limit my exposure. I began to think about this when they reported the large increase in EPS.
I am more concerned that although this would be grossly "unfair", it could be legal. I don't want to hire a tax attorney to figure this out.
I certainly do not trust CLNH, because of their history of burning shareholders. I also doubt you could get a straight answer out of Investor Relations at CLNH.
As I only held shares for about one quarter, my exposure should only be for one quarter's income.
I would rather wait and see how they handle in 12/31/10 K-1 at yearend before I consider owning this again.