Reply To: GE Wabtec Spinoff

Home Fairmark Forum Taxation of Investments GE Wabtec Spinoff Reply To: GE Wabtec Spinoff

#4965
KAWill
Participant

Thanks for the help. I did find more information that raises additional questions.

https://news.bloombergtax.com/daily-tax-report/insight-ge-was-going-to-satisfy-spin-off-requirements-but-flunk-acquisition-limitation

“In some cases, spin-offs have a dual character. They can be tax-free at the shareholder level, but taxable at the distributing corporation level.”

“While GE has revised its deal with Wabtec, such that the spin-off will now be taxable at both the GE and GE shareholder levels, the PLR issued in connection with the original transaction provides a blueprint for structuring a “partially taxable” Morris Trust or “Reverse Morris Trust” transaction.”

Brokerage firms may not have all the details on this spinoff. Maybe this is a case where we will be told to consult a tax advisor. In any case, it will be interesting to see how everything is reported on the brokerage 1099 forms next year.

The statement that the spinoff would be a taxable dividend makes you wonder how that would be reported on 1099 forms. That could also have impacted the cost basis and holding period of the shares received. Note also that my brokerage firm has not changed my basis in GE.

Lots of interesting questions!