CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer (or in the Merger) will be a taxable transaction for United States federal income tax purposes (and may also be a taxable transaction under applicable state, local or other tax laws). In general, a stockholder will recognize gain or loss for such purposes equal to the difference between the amount of cash received and such stockholder's adjusted tax basis in the Shares. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss will be capital gain or loss if the Shares are a capital asset in the hands of the stockholder and will be long term capital gain or loss if the Shares were held for more than one year on the date of sale (in the case of the Offer) or the effective time of the Merger (in the case of the Merger). The receipt of cash for Shares pursuant to the exercise of dissenters' rights, if any, will generally be taxed in the same manner as described above. Payments in connection with the Offer or the Merger may be subject to "backup withholding" at a rate of 31%. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's TIN, (b) furnishes an incorrect TIN or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations, non-United States persons and financial institutions, provided they properly establish their status when required to do so by completing and providing the appropriate IRS forms. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by properly completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, to a stockholder who is related to Purchaser for purposes of Section 302 of the Internal Revenue Code or to a stockholder who is not a United States person or who is otherwise subject to special tax treatment under the Internal Revenue Code (for example, brokers, dealers in securities, banks, insurance companies, tax-exempt organizations and financial institutions). For these purposes, a United States person means a person who or which is (i) an individual who is a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. In addition, the foregoing discussion does not address the tax treatment of holders of options to acquire Shares. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES INCOME AND OTHER TAX LAWS.
Appears in 1 contract
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt following is a summary of cash for the principal federal income tax consequences of the Offer and the Merger to holders whose Shares are purchased pursuant to the Offer (or whose Shares are converted into the right to receive cash in the MergerMerger (whether upon receipt of the Merger Consideration or pursuant to the proper exercise of dissenter's rights). The discussion applies only to holders of Shares in whose hands Shares are capital assets, and may not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to holders of Shares who are not citizens or residents of the United States of America. THE TAX DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS. The receipt of the offer price and the receipt of cash pursuant to the Merger (whether as Merger Consideration or pursuant to the proper exercise of dissenter's rights) will be a taxable transaction for United States federal income tax purposes (and also may also be a taxable transaction under applicable state, local or and other income tax laws). In general, for federal income tax purposes, a stockholder holder of Shares will recognize gain or loss for such purposes equal to the difference between the amount of cash received and such stockholderholder's adjusted tax basis in the SharesShares sold pursuant to the Offer or converted to cash in the Merger and the amount of cash received therefor. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the Merger. Such gain or loss will be capital gain or loss if the Shares are a capital asset in the hands of the stockholder and loss. Individual holders will be long term capital subject to tax on the net amount of such gain or loss if at a maximum rate of 20% provided that the Shares were held for more than one year on the date of sale 12 months. Special rules (and generally lower maximum rates) apply to individuals in the case of the Offer) or the effective time of the Merger (in the case of the Merger)lower tax brackets. The receipt deduction of cash for Shares pursuant capital losses is subject to the exercise of dissenters' rights, if any, will generally be taxed certain limitations. Stockholders should consult their own tax advisors in the same manner as described abovethis regard. Payments in connection with the Offer or the Merger may be subject to "backup withholding" withholding at a rate of 31%% rate. Backup withholding generally applies if the a stockholder (ai) fails to furnish such stockholder's social security number or taxpayer identification number ("TIN"), (bii) furnishes an incorrect TIN TIN, (iii) fails properly to report interest or dividends or (civ) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally persons, including corporations and financial institutions generally, are entitled to exemption exempt from backup withholding, including corporations, non-United States persons and financial institutions, provided they properly establish their status when required to do so by completing and providing the appropriate IRS forms. Certain penalties apply for failure to furnish correct information and for failure to include the reportable payments in income. Each stockholder should consult with his such stockholder's own tax advisor as to such stockholder's qualification qualifications for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by properly completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, to a stockholder who is related to Purchaser for purposes of Section 302 of the Internal Revenue Code or to a stockholder who is not a United States person or who is otherwise subject to special tax treatment under the Internal Revenue Code (for example, brokers, dealers in securities, banks, insurance companies, tax-exempt organizations and financial institutions). For these purposes, a United States person means a person who or which is (i) an individual who is a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. In addition, the foregoing discussion does not address the tax treatment of holders of options to acquire Shares. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES INCOME AND OTHER TAX LAWS.
Appears in 1 contract
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences set forth below is for general information only and is based on the law as currently in effect. The tax treatment of each Holder will depend in part upon such Xxxxxx's particular situation. Special tax consequences not described herein may be applicable to particular classes of taxpayers, such as financial institutions, broker-dealers, insurance companies, foreign corporations, foreign partnerships, foreign trusts, foreign estates, persons who are not citizens or residents of the United States, tax-exempt entities, Holders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who received payments in respect of options to acquire Shares. ALL HOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS. The receipt of cash for Shares pursuant to the Offer (or in the Merger) Merger will be a taxable transaction for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and may also be a taxable transaction under applicable state, local local, foreign income or other tax laws). In generalGenerally, for federal income tax purposes, a stockholder Holder will recognize gain or loss for such purposes in an amount equal to the difference between the amount of cash received by the Holder pursuant to the Offer or the Merger and such stockholderthe Holder's adjusted tax basis in the Shares. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold purchased pursuant to the Offer or converted to cash in the Merger. Such Gain or loss will be calculated separately for each block of Shares tendered and purchased pursuant to the Offer or converted in the Merger, as the case may be. For federal income tax purposes, such gain or loss will be a capital gain or loss if the Shares are a capital asset in the hands of the stockholder Holder, and will be long a long-term capital gain or loss if the Holder's holding period is more than one year as of the date the Purchaser accepts such Shares for payment pursuant to the Offer or the effective date of the Merger, as the case may be. In the case of a noncorporate Holder, capital gain is currently eligible for reduced rates of taxation if the Shares were held for more than one year year. There are limitations on the date deductibility of sale (in capital losses. All Holders should consult their own tax advisors to determine the case of the Offer) U.S., federal, state, local or the effective time of the Merger (in the case of the Merger). The receipt of cash for Shares pursuant to the exercise of dissenters' rights, if any, will generally be taxed in the same manner as described above. Payments in connection with the Offer foreign income or the Merger other tax consequences that may be subject relevant to "backup withholding" at a rate of 31%. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's TIN, (b) furnishes an incorrect TIN or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations, non-United States persons and financial institutions, provided they properly establish their status when required to do so by completing and providing the appropriate IRS forms. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by properly completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, to a stockholder who is related to Purchaser for purposes of Section 302 of the Internal Revenue Code or to a stockholder who is not a United States person or who is otherwise subject to special tax treatment under the Internal Revenue Code (for example, brokers, dealers in securities, banks, insurance companies, tax-exempt organizations and financial institutions). For these purposes, a United States person means a person who or which is (i) an individual who is a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. In addition, the foregoing discussion does not address the tax treatment of holders of options to acquire Shares. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES INCOME AND OTHER TAX LAWSthem.
Appears in 1 contract
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt following discussion describes certain United States federal income tax consequences of cash participating in the Offer, is for general information only and does not purport to consider all aspects of federal income taxation that may be relevant to stockholders. The consequences to any particular stockholder may differ depending upon that stockholder's own circumstances and tax position. The discussion deals only with Shares held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code") and does not address what may be relevant to stockholders in special tax situations, such as financial institutions, insurance companies, stockholders liable for the alternative minimum tax, dealers in securities or currencies, tax-exempt organizations, foreign persons, persons who acquired their Shares upon the exercise of employee stock options or otherwise as compensation and persons who are holding such Shares as part of a straddle, conversion, hedge or hedging transaction, who may be subject to special rules. The discussion does not consider the effect of any applicable foreign, state or local tax laws. In addition, the impact of pending and future budget and tax legislation on the United States federal tax system, including possible effects on taxation of the Offer, is uncertain. EACH STOCKHOLDER IS URGED TO CONSULT HIS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO SUCH STOCKHOLDER, INCLUDING THE APPLICATIONS OF STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE TAX LAW CHANGES. The sale of Shares pursuant to the Offer (or in the Merger) will be a taxable transaction for United States federal income tax purposes purposes. The United States federal income tax consequences to a stockholder may vary depending on the stockholder's particular facts and circumstances. Under the stock redemption rules of Section 302 of the Code, a sale by a stockholder to the Company pursuant to the Offer will be treated as a "sale or exchange" of such Shares (and may also be rather than as a taxable transaction under applicable statedistribution by the Company with respect to the Shares held by the tendering stockholder) if the receipt of cash upon such sale: (a) results in a "complete redemption" of the stockholder's stock in the Company, local (b) is "substantially disproportionate" with respect to the stockholder or other tax laws(c) is "not essentially equivalent to a dividend" with respect to the stockholder (each as described below). In generalIf any of the three above tests is satisfied, and the sale is therefore treated as a "sale or exchange" of such Shares for United States federal income tax purposes, the tendering stockholder will recognize gain or loss for such purposes equal to the difference between the amount of cash received by the stockholder pursuant to the Offer and such the stockholder's adjusted tax basis in the Shares. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold pursuant to the Offer or converted to cash in the MergerOffer. Such Any such gain or loss will be capital gain or loss if the Shares are a capital asset in the hands of the stockholder and will be long long-term capital gain or loss if the such Shares were have been held for more than one year year. Therefore, a tendering stockholder may wish to take the various bases and holding periods of such stockholder's Shares into account, if such characteristics are not uniform, in determining which Shares to tender. If none of the three tests described above is satisfied with respect to a stockholder, such stockholder will be treated as having received a distribution, taxable as a dividend to the extent of the Company's available "earnings and profits", in an amount equal to the amount of cash received by the stockholder pursuant to the Offer (without reduction for the tax basis of the Shares sold pursuant to the Offer), no loss will be recognized, and the tendering stockholder's basis in the Shares sold pursuant to the Offer will be added to such stockholder basis in his remaining Shares, if any. Any cash received in excess of such earnings and profits will be treated, first, as a non-taxable return of capital to the extent of the stockholder's basis in all of his Shares, and, thereafter, as a capital gain to the extent it exceeds the stockholder's basis. The Company anticipates, but there can be no assurance, that its available earnings and profits will be such that all amounts treated as a distribution will be taxed as a dividend. The distinction between long-term capital gains and ordinary income is relevant because certain individuals are subject to taxation at a reduced rate on the date excess of net long-term capital gains over net short-term capital losses. In addition, legislation currently under consideration would provide for reduced taxation of net long-term capital gains compared to the rates currently applicable to such income. Stockholders are urged to consult their own tax advisors regarding any possible impact on their obligation to make estimated tax payments as a result of the recognition of any capital gain (or the receipt of any ordinary income) caused by the sale of any Shares to the Company pursuant to the Offer. In determining whether any of the tests under Section 302 is satisfied, a stockholder must take into account both Shares actually owned by such stockholder and any Shares considered as owned by such stockholder by reason of certain constructive ownership rules set forth in Section 318 of the Code. Under these rules an individual stockholder generally will be considered to own Shares which such stockholder has the right to acquire by the exercise of an option or warrant and Shares owned (and, in some cases, constructively owned) by certain members of the stockholder's family and by certain entities (such as corporations, partnerships, trusts and estates) in which such stockholder, a member of such stockholder's family or a related entity has an interest. Under Section 318, participants in the ESOP will not be considered to own Shares held by the ESOP and attributable to participants' accounts ("ESOP Shares"). ESOP participants may also actually own or be considered to own Shares ("Non-ESOP Shares") other than ESOP Shares. Whether an ESOP participant satisfies one of the three tests under Section 302 with respect to a sale of Non-ESOP Shares pursuant to the Offer is determined without regard to ESOP Shares. A sale of Shares pursuant to the Offer will result in a "complete redemption" of a stockholder's stock in the Company if, pursuant to the Offer, either (i) the Company purchases all of the Shares actually and constructively owned by the stockholder pursuant to the Offer and the stockholder holds no other stock of the Company or (ii) all Shares actually owned by the stockholder are sold pursuant to the Offer and, with respect to constructively owned Shares, such stockholder is eligible to waive (and effectively waives) constructive ownership of all such Shares under procedures described in Section 302(c) of the Code. Stockholders in this position should consult their tax advisors as to the availability of such a waiver. The sale of Shares pursuant to the Offer will be "substantially disproportionate" with respect to a stockholder if, immediately after the sale pursuant to the Offer (treating as not outstanding all Shares purchased pursuant to the Offer), such stockholder's actual and constructive percentage ownership of Shares is less than 80% of the stockholder's actual and constructive percentage ownership of Shares immediately before the purchase of Shares pursuant to the Offer (treating as outstanding all Shares purchased pursuant to the Offer). In order for the sale of Shares by a stockholder pursuant to the Offer to qualify as "not essentially equivalent to a dividend" the stockholder must experience a "meaningful reduction" in his proportionate interest in the Company as a result of such sale, taking into account the constructive ownership rules. The Internal Revenue Service has held in a published ruling that, under the particular facts of that ruling, a very small reduction in the percentage stock ownership of a stockholder constituted a "meaningful reduction" when the stockholder owned an insignificant percentage of the corporation's stock before and after a redemption and did not exercise any control over corporate affairs and where, as expected in the case of the Offer) or , payments are not pro rata with respect to all outstanding Shares. Whether the effective time of the Merger (in the case of the Merger). The receipt of cash for Shares by a stockholder pursuant to the exercise Offer will result in a meaningful reduction of dissenters' rightsthe stockholder's proportionate interest will depend on the stockholder's particular facts and circumstances. Stockholders seeking to rely on this test should consult their tax advisors as to the application of this standard to their particular situations. Stockholders should be aware that their ability to satisfy any of the foregoing tests may be affected by any proration pursuant to the Offer. While not free from doubt, if any, will generally be taxed in the same manner as described above. Payments in connection it is possible that an acquisition or disposition of Shares (including market purchases and sales) substantially contemporaneous with the Offer or will be taken into account in determining whether any of the Merger may three tests described above is satisfied. Any income which is treated as a dividend pursuant to the rules described above will be eligible for the 70% dividends received deduction generally allowable to corporate stockholders under Section 243 of the Code, subject to applicable limitations, including those relating to "backup withholdingdebt-financed portfolio stock" at under Section 246A of the Code and to the holding period requirement of Section 246 of the Code. Also, since it is expected that purchases pursuant to the Offer will not be pro rata as to all stockholders, any amount treated as a rate dividend to a corporate stockholder will constitute an "extraordinary dividend" subject to the provisions of 31%Section 1059 of the Code (except as may otherwise be provided in regulations yet to be promulgated by the Treasury Department). Backup withholding generally applies if Under Section 1059, a corporate stockholder must reduce the stockholder (a) fails to furnish tax basis in all of such stockholder's TINstock (but not below zero) by the "nontaxed portion" of any "extraordinary dividend" and, (b) furnishes an incorrect TIN or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that if such portion exceeds the TIN provided is such stockholder's correct number and tax basis for the stock, must treat any such excess as additional gain on the subsequent sale or other disposition of such Shares. Corporate stockholders should also consider the effect of pending legislative proposals that, if enacted in their current form, could affect the dividends received deduction to corporate stockholders that such stockholder is not subject to backup withholdingparticipate in the Offer. Backup withholding is not an additional Corporate stockholders should consult their tax but merely an advance payment, which may be refunded advisors as to the extent it results in an overpayment application of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations, non-United States persons and financial institutions, provided they properly establish their status when required to do so by completing and providing Section 1059 of the appropriate IRS forms. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by properly completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant Code to the exercise of employee stock options or otherwise as compensation, to a stockholder who is related to Purchaser for purposes of Section 302 of the Internal Revenue Code or to a stockholder who is not a United States person or who is otherwise subject to special tax treatment under the Internal Revenue Code (for example, brokers, dealers in securities, banks, insurance companies, tax-exempt organizations and financial institutions)Offer. For these purposesa discussion of certain withholding tax consequences to tendering stockholders, a United States person means a person who or which is (i) an individual who is a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. In addition, the foregoing discussion does not address the tax treatment of holders of options to acquire Sharessee Section 3. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND ONLY. EACH STOCKHOLDER IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO CONSULT THEIR SUCH STOCKHOLDER'S OWN TAX ADVISORS WITH RESPECT ADVISOR TO DETERMINE THE SPECIFIC PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, SUCH STOCKHOLDER (INCLUDING THE APPLICATION APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAXCONSTRUCTIVE OWNERSHIP RULES AND FOREIGN, STATE AND STATE, LOCAL OR NON-UNITED STATES INCOME TAX LAWS AND OTHER POSSIBLE TAX LAWSLAW CHANGES) OF THE SALE OF SHARES PURSUANT TO THE OFFER.
Appears in 1 contract
Samples: Issuer Tender Offer Statement
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The receipt following is a summary of cash certain United States federal income tax consequences of the Offer and the Merger to stockholders of Syntellect whose Shares are tendered and accepted for Shares payment pursuant to the Offer (or whose Shares are converted into the right to receive cash in the Merger. The discussion is for general information only and does not purport to consider all aspects of United States federal income taxation that might be relevant to stockholders of Syntellect. The discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all of which are subject to change, possibly with retroactive effect. The discussion applies only to stockholders of Syntellect in whose hands Shares are capital assets within the meaning of Section 1221 of the Code. This discussion does not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation or to certain types of stockholders (such as insurance companies, tax-exempt organizations, financial institutions and broker-dealers) which may be subject to special rules. This discussion does not discuss the United States federal income tax consequences to any stockholder of Syntellect who, for United States federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any foreign, state or local tax laws. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD CONSULT ITS TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL, AND FOREIGN TAX LAWS. The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes (and may also be a taxable transaction under applicable possibly for state, local or other local, and foreign income tax laws)purposes as well. In general, a stockholder who sells Shares pursuant to the Offer or receives cash in exchange for Shares pursuant to the Merger will recognize capital gain or loss for such United States federal income tax purposes equal to the difference difference, if any, between the amount of cash received and such the stockholder's adjusted tax basis in the SharesShares sold pursuant to the Offer or exchanged for cash pursuant to the Merger. Gain or loss must will be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) sold tendered pursuant to the Offer or converted exchanged for cash pursuant to cash in the Merger. Such capital gain or loss will generally be long-term capital gain or loss provided that a stockholder's holding period for such Shares is more than one year at the time of consummation of the Offer or the Merger, as the case may be. Such gain or loss will generally be capital gain or loss if the Shares are a capital asset in the hands of the stockholder and will be long short-term capital gain or loss if the Shares were held for more holding period is less than or equal to one year on the date of sale (in the case of the Offer) or the effective at time of the Merger (in the case consummation of the Merger). The receipt of cash for Shares pursuant to the exercise of dissenters' rights, if any, will generally be taxed in the same manner as described above. Payments in connection with the Offer or the Merger Merger, as the case may be subject to "backup withholding" at a rate of 31%. Backup withholding generally applies if the stockholder (a) fails to furnish such stockholder's TIN, (b) furnishes an incorrect TIN or (c) under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN provided is such stockholder's correct number and that such stockholder is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons generally are entitled to exemption from backup withholding, including corporations, non-United States persons and financial institutions, provided they properly establish their status when required to do so by completing and providing the appropriate IRS forms. Certain penalties apply for failure to furnish correct information and for failure to include reportable payments in income. Each stockholder should consult with his own tax advisor as to such stockholder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. Tendering stockholders may be able to prevent backup withholding by properly completing the Substitute Form W-9 included in the Letter of Transmittal. The foregoing discussion may not be applicable to a stockholder who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, to a stockholder who is related to Purchaser for purposes of Section 302 of the Internal Revenue Code or to a stockholder who is not a United States person or who is otherwise subject to special tax treatment under the Internal Revenue Code (for example, brokers, dealers in securities, banks, insurance companies, tax-exempt organizations and financial institutions). For these purposes, a United States person means a person who or which is (i) an individual who is a citizen or resident of the United States for United States federal income tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. In addition, the foregoing discussion does not address the tax treatment of holders of options to acquire Shares. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES INCOME AND OTHER TAX LAWSbe.
Appears in 1 contract
Samples: Offer to Purchase (Syntellect Inc)