However, this information leakage comes at the expense of higher price impact, and then a more costly liquidation, for the fire sale originator.
Given the scale of the incentives, this probably isn’t too surprising a result. As the study finds, clients of brokers participating in fire sales made about 10 percent more “predatory trades” – selling the stocks that the dying fund was trying to offload.
Property Dividends & Spin-Offs: Corporations occasionally pay dividends with non-cash assets.
Nonliquidating corporate distributions are distributions of cash and/or property by a continuing corporation to its shareholders.
When multiple properties are distributed, the corporation computes gain on an asset-by-asset basis (Rev. Gain attributable to capital assets and certain property used in a trade or business (Sec. Corporations generally report nonliquidating distributions to shareholders on Form 1099-DIV, Dividends and Distributions (Sec. has held his stock for three years, and his stock basis is ,000. The corporation cannot afford to redeem the stock entirely for cash because its cash balance of ,000 must be used primarily to service real estate debt.
and its debtor affiliates (“Plan”) became effective and their assets were transferred to the HERO Liquidating Trust.
is going out of business and shutting down all its stores.
At the shareholder level, a nonliquidating corporate distribution can produce a variety of tax consequences, including taxable dividend treatment, capital gain or loss, or a reduction in stock basis.
At the corporate level, a nonliquidating corporate distribution can also have varying tax consequences.