Thank you for helping me to clarify my thinking on this. It seems like the right course of action is to sell it and deal with the ordinary gain and the capital loss. Doing the swap introduces variables that are needlessly complex and perhaps without much advantage. Who needs that? lol
So if I understand you correctly, if I sell today I will have ordinary income (recapture, etc.) and a huge capital loss which I can use against other gains. If I do the swap, I will have COD income that is reported as a capital gain, but the basis I have in Linn will not transfer to Linnco, so in effect I will lose the benefit of the capital losses I have on the books. And you're right: once I sell this thing I am so out of here. Not looking back to Linnco. Ever.
Thanks. That is all interesting information. I, too wondered how Linn management can do the swap and suggest that the COD won't adhere to the new shares. It seems like a deliberate attempt to avoid taxation, so that would be a red flag. God help us if we swap and find out we have COD and Ordinary gain!
I used Tax Package support to plug in my own information. It is a reasonable question as to whether that is a useful tool or not, but what else is there? I could make a reasonable guess based on my own records, but I wouldn't believe myself. lol.
As far as getting guidance from Ellis and Company, I think I've had about enough of their guidance. Less
Making the swap is a conversion to a corporation from a ptp. That will trigger ordinary gain. So, the question is whether the ordinary gain tax is worse than the tax on the COD you get if you don't swap. Given that there's almost 10B in debt, that's a lot of COD compared to ordinary gain - at least in my case.
Assuming debt of $10B is forgiven and 355M share outstanding, that is $28.73 per share in COD, or $28,730 per 1000 shares. The ordinary gain on 1000 shares is considerably less, again, at least in my case.
I'm not an accountant, so maybe my numbers are wrong. If so, I'd appreciate a second opinion. If, I'm right, the decision is fairly easy.