Home Capital Group Inc T.HCG

The SIB can work in cash account, but not ideal.

[canader]

So the way they do this thing you end up getting most of the money, as a dividend, and a few bucks worth as return of capital. So you get a significant capital loss per share that you sell in the cash account. Its all accounting magic and a BS tax trap for the uninformed.

But If you have a bunch of capital gains that you can offset the capital loss against it kinda evens itself out.

But you still end up paying dividend tax rate, instead of capital tax rate on most of the "Purchase Price"

So could be the selling pressure over the last month has been some big boys selling some in the cash account to bring up thier captial gains to apply against the capital loss. Who knows.
I am not a cricket these days, but not interested in the gymnastics needed to do the SIB in a cash account. But it is doable.

This SIB thing sucks for the uninformed retail investor that sells shares into the SIB not knowing the tax consequences or how to mitigate against the tax consequences.

So retail dudes, If you don't know the tax consequences of this in a cash account, DON'T DO IT.

Only in RRSP, or TFSA.

GLTA, cept the dhorties of course!

[organeer]

Does this advice still apply if you (or I) am in a lower tax bracket? Like I don't have a big portfolio. 

[canader]

It applies as tax no matter what. What percentage depends on your tax bracket, but as far as I know all tax brackets. But here is an example of what it could look like. assuming puc(paid up capital is $3.50) Purchase price tender: $43.50 Puc: $3,50 Differece = $40.00 >>> you pay dividend on $40.00 per share (sdn div, etc) and you get a nice capital loss of $40. so PUC

[organeer]

In your example, if $3.50 is PUC, do you mean $40 is a capital loss or gain? IF it is a capital loss as you say, why is it painful? You don't have to pay taxes on capital losses, only gains?

[canader]

$40 dividend per stock. $40 dollar capital loss per stock. Depends what price you bought the stocks at. If you bought the stock at $39and sell for $43.50, instead of $4.50 capital gains per share you have $41 dividend per share, and $41 capital loss per share. It kinda stings to pay $40 dividend on each share instead of taxes on $4.50/share.    

[organeer]

I understand. It makes sense! Thank you for the clarification. Good luck to all except the dhorties who have leveraged their shorts shirts and underwears