Samurai Capital Corp V.SMU.UN

RE:RE:RE:Tax implications ...

[maypeters]

Possible that the brokerages may not show the interest income. 

I did not want to take the chance as 52% tax vs half that (offset by some losses) + save on the margin  (6.75% right now) right away swayed me to sell. I have zero doubts the deal will go through. 

Maybe not bad to purchase in registered accounts where the gain can be tax free or deferred. 

Nothing like higher interest rates to motive everyone to pay down their debts :-)

CanSiamCyp wrote: You're welcome maypeters!

I'm still holding our 7,700 units in our Margin Account cuz I feel the 3.5% differential cf. the $23.50 Arrangement Price is a bit steep. In fact, I have been buying SMU.un units with free cash in RRSP, TFSA and RESP accounts ... since I know that the deal will close by end of Q1 and therefore the return is better than the HISA option: 3.5% for 3 months is close to 14% on an annualized basis.

I feel that as we get closer to the closing date, the JV partners in the buyout could step up and start buying units on the open market to save on the closing price. That would likely shrink the differential significantly.

The other aspect I have been investigating ... since 2017, I have had four REITs taken out through an Arrangement .... AAR.un, MST.un, RUF.un, and ACR.un .... and in each case I have confirmed from my records that the brokerage handled the transaction as a tender sale .... in other words the tender price was shown in total as liquidation proceeds and there were no special components shown as a taxable distribution in the T3 for the corresponding year. I am pretty sure that at least one of the REITs warned of potential tax implications but I opted to ignore ... and was subsequently surprised that the brokerage ignored this aspect of the final payout. So if that is always the case ... one should wait and receive the entire $23.50 and assume the brokerage will not show any part of the incoming cash as a distribution but totally as tender price. Anyone else have insight into this?

Cheers!

maypeters wrote: Thanks CanSiamCyp for posting this. I did read it in the circular but I am sure lot of folks would not have noticed had you not posted the same. 

For those with registered accounts - no difference but huge difference in tax implication for taxable accounts. 

GLTA

CanSiamCyp wrote: .... of the Special Distribution are spelled out in the Circular. Of the $23.50 Special Distribution to be paid out and estimated $2.10 of the total will comprise Other Income and/or Capital Gains. Units sold at market prior to the Arrangement Date will be subject only to Capital Gains taxation (i.e., net proceeds of disposition less the ACB at the time of the Arrangement Date).