Treatment as Closed Transaction Sample Clauses

Treatment as Closed Transaction. If the value of the right to receive Milestone Payments pursuant to the CVRs can be “reasonably ascertained,” the transaction generally will be treated as a “closed transaction” for U.S. federal income tax purposes, and gain or loss would be determined upon consummation of the Offer or the Merger, as applicable, in the same manner as if the transaction were an “open transaction,” except that a U.S. Holder would take into account the fair market value of the right to receive Milestone Payments pursuant to the CVRs, determined on the date of the consummation of the Offer or the Merger, as applicable, as an additional amount realized at the time of the Closing for purposes of calculating gain or loss with respect to the disposition of Shares. If the transaction is treated as a “closed transaction” for U.S. federal income tax purposes, a U.S. Holder’s initial tax basis in the right to receive Milestone Payments pursuant to the CVRs will equal the fair market value of the right to receive Milestone Payments pursuant to the CVRs on the date of the consummation of the Offer or the Merger, as applicable. The holding period of the right to receive Milestone Payments pursuant to the CVRs will begin on the day following the date of the consummation of the Offer or the Merger, as applicable.

Treatment as Closed Transaction. If the transaction is treated as a “closed transaction”, there is no authority directly addressing the treatment of contingent payment rights payments similar to the Milestone Payments. You should therefore consult your tax advisor as to the taxation of such payments. Under characterization as a “closed transaction,” a portion of one or more payments made pursuant to a CVR could be treated as a non-taxable return of a U.S. Holder’s adjusted tax basis in the right to receive Milestone Payments pursuant to the CVR. To the extent that payments are not treated as such, payments may be treated as either (i) payments with respect to a sale of a capital asset, (ii) income taxed at ordinary rates or (iii) dividends. Additionally, it is possible that, were a payment to be treated as being with respect to the sale of a capital asset, a portion of such payment would constitute imputed interest under Section 483 of the Code (as described above under “Treatment as Open Transaction”). Due to the legal and factual uncertainty regarding the valuation and tax treatment of the right to receive Milestone Payments pursuant to the CVRs, you are urged to consult your tax advisors concerning the tax consequences resulting from the receipt of the right to receive Milestone Payments pursuant to the CVRs in the Offer or the Merger, as applicable.

Treatment as Closed Transaction. The Reorganized Parent will report receipt of the CVRs as part of a closed transaction for U.S. federal income tax purposes. A U.S. Holder who receives cash and CVRs in exchange for Existing Common Stock Interests generally will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (i) the amount of cash received plus the fair market value (determined as of the Effective Time) of any CVRs received and (ii) the U.S. Holder’s adjusted tax basis in its Existing Common Stock Interests. The proper method to determine the fair market value of a CVR is not clear, but it is possible that the trading value of the Existing Common Stock Interests would be considered along with other factors in making that determination. Any capital gain or loss recognized will be long-term capital gain or loss if the U.S. Holder’s holding period for such Existing Common Stock Interests exceeds one year as of the Effective Date. The deductibility of capital losses is subject to limitations, as discussed below. Gain or loss generally will be determined separately for each block of Existing Common Stock Interests Shares (that is, Existing Common Stock Interests acquired at the same cost in a single transaction). A U.S. Xxxxxx’s initial tax basis in a CVR received would equal the fair market value of such CVR as of the Effective Date as determined for U.S. federal income tax purposes. The holding period for a CVR would begin on the day following the Effective Date. Pursuant to the CVR Agreement, the Company intends to provide the CVR Agent with the Company’s determination of the fair market value of the CVRs issued pursuant to the CVR Distribution Framework. The Company’s determination is not binding on the IRS as to the U.S. Holder’s tax treatment or the fair market value of the CVRs. Although the Company intends to provide such information on or before April 15th of the year following the Effective Date, a U.S. Holder should be prepared to obtain extensions of the filing date for their income tax returns at the federal, state and local level in the event that the Company is unable to provide such information before April 15th of the year following the Effective Date. As noted above, there is no authority directly addressing the U.S. federal income tax treatment of contingent payment rights with characteristics similar to the rights under the CVRs and, therefore, the amount, timing and character of any gain, income or l...