Pebble, I don't know that particular transaction but, if it was done as a Section 355 spinoff, the spunoff company does take the same basis in assets that existed prior to the spinoff.
At least I have something to say Bravo, you appear to be a broken record. Analyze my math here and give me some constructive criticism.
I'm actually worried about the market in general given the Greek situation. They walked away from talks with the EU today in a game of chicken. DAX futures are down 120 (1.09%). Curious how our futures will open later. The market is at all time highs and doesn't need a black or grey swan event right now.
Thanks, Pebble. I'm waiting for baba to stabilize. I like Yhoo but dislike what I'm seeing in baba. I'll be back to yhoo soon though hopefully. I hope all is well with you. Careful on the slopes.
Let's compare. For argument sake let's ignore the small active trade or business since it will be minimal and let's assume the primary asset of Spinco is Baba stock. Two scenarios: 1. I buy Baba stock directly, let's say $100K and it appreciates to $500K. I sell and have a $400K gain, pay 20% federal capital gains tax of $80K and walk away with $420K in my pocket. 2. I buy $100K of Spinco stock which represents $100K of Baba stock (let's assume Spinco's basis is $100K for argument sake to compare apples to apples) Baba goes to $500K, Spinco sells Baba stock, pays a 35% tax on the $400K gain, amounting to $140K, has $360K to distribute to shareholders who have another gain, $360K-$100K purchase=$240 gain, at 20% = $48K tax, so you now walk away with $312K in pocket. $420K in pocket after tax owning Baba directly or $312K in pocket owning Baba through owning Spinco. True, Baba may acquire Spinco and make that gain go away but why take the chance?
Goldman will deny knowledge and skate but the omission of the disclosure in the company's S-1 will hang them in the lawsuit.
Try thinking for yourself and do some third grade math. You know the #shares and you know the price. Multiply them. Boy you are in serious denial. Lol.
What everyone else in denial can't see is baba didn't fully disclose in their S-1 and that's a cardinal sin. Amounts to securities fraud and the plaintiffs will win.
The math says $24 B. If you truly believe what you are saying you're a bigger idiot than even I thought.
At today's price it's worth $34 B less about $10 B in built in taxes for a net of $24 B. You can wish it up all you want but the math doesn't lie.
Baba is going to get much worse before it gets better. Don't you know those with locked up shares are chomping at the bit to sell in light of the sec and other news. Will take yhoo with it.