Claims that Are Tax Securities Sample Clauses

Claims that Are Tax Securities. Notwithstanding the foregoing discussion, if the Prepetition Credit Facility constitutes a “security” for United States federal income tax purposes (a “Tax Security”), no loss will be recognized upon the exchange, in whole or in part, of a Prepetition Credit Facility Claim for New Eagle Common Stock (except to the extent attributable to accrued interest, as discussed above), and gain (except to the extent attributable to accrued interest, as discussed above) will only be recognized upon such an exchange to the extent of the fair market value of the Cash or property received other than New Eagle Common Stock. The term “security” is not defined in the Tax Code. While the determination whether a particular claim or debt constitutes a Tax Security depends upon an overall evaluation of the nature of the claim, in general, debt instruments with an original term of at least ten years qualify as securities, debt instruments with an original term of less than five years do not qualify as securities, and debt instruments with an original term of between five and ten years may qualify as securities. The Debtor has not determined whether the Prepetition Credit Facility Claims are Tax Securities. Each holder should consult its tax advisor regarding the tax status of its Claim or Claims. The tax basis of New Eagle Common Stock received pursuant to the Plan in exchange for Claims that constitute Tax Securities (other than the portion, if any, attributable to accrued interest) will equal the holder’s tax basis in the Claims exchanged, decreased by the fair market value of any other property received in exchange for such Claims and increased by any gain recognized. The holding period for such New Eagle Common Stock shall include the holding period of the Claims exchanged therefor.