MK, I have gone back and checked all of your work on the accounting of PZN/OPCO and so far you are batting 1000. But, I remain confussed on the declaration requirements for a dividend.
When I read the tax code, I understood it to say that the distribution must be declared in the year it is earned and can be paid as late as the end of the following month after fiscal year end. Is this not right?
If it is right, doesnt that mean the company has to declare its dividend by the end of the month and pay it before the end of January 2000?
ewocfo, you're very kind, but I'm batting .000 on this stock.
Anyway, thanks to NHY and confirmed by some research, here's the deal on the dividends. E&P has to be out by 12/31/99. I figured roughly 18 cents remaining.
As far as the 95% of taxable income dividend, if it is declared by end of Dec 99, it can be paid in Jan 00. That's in IRC Sec. 857(b)(8).
IRC Sec 858 goes further and allows a "subsequent year" or "spill-over" dividend to meet the requirement for a 95% TI distribution. As long as the dividend is declared by the due date of the tax return for 1999 (including extensions, thus as late as 9-15-00), the appropriate election is made, and the actual payment is not later than 12-31-00. If those conditions are met, the company treats the later istribution as if made during 1999, but the shareholders pay tax on it in 00. The cost of that asymmetrical treatment is a 4% excise tax on the company.
and someone (paperman or NHY?) was kind enough to respond, but I would like to table it again. Can they keep kiting the dividend indefinitely, paying the 99 normal 12-31-00, the 00 normal 12-31-01, etc.? The 4% excise tax would be below the interest rate they would pay if they needed to borrow to pay the dividend, right?