![]() ![]() ![]() ![]() For example, the replacement of old share certificates with new certificates when there has been no change in terms does not mean that a disposition has occurred, nor is it to be assumed that no disposition is involved when a change in terms is not accompanied by the issuance of a new certificate.Ĥ. As a general rule, and subject to the first sentence in 2 above, the Department examines the effect achieved by a particular set of changes, rather than the method adopted to accomplish it. In the latter case a disposition necessarily takes place, while in the former case the significance of the change is the determining factor.ģ. For example, a change in a right attaching to a security can be effected by an amendment to its original terms or by the cancellation of the original security and its replacement by another security identical in all respects except that the changed right is now incorporated. By virtue of clause 54(c)(ii)(A), any transaction or event that involves the redemption in whole or in part or the cancellation of a security necessarily results in its disposition in the hands of the holder, even though the result achieved could have been accomplished by a change in terms. Additionally, if such a holder fails to recognize a disposition in a situation described in this bulletin and the Department does not assess or reassess to give effect to the disposition within the statutory time limit, the tax consequences of a disposition occurring subsequent to the expiration of this time will be computed as though the prior disposition had not taken place.Ģ. However, the Department will not require that a disposition be reported by a holder of an altered security if there are no resultant tax consequences. The purpose of this bulletin is to discuss the factors that the Department considers in determining whether or not a disposition has taken place in such circumstances. Alterations made in the rights, preferences, terms, conditions, restrictions or limitations attaching to shares, bonds, debentures, notes, certificates, mortgages, hypothecs, agreements of sale or similar obligations (hereinafter referred to as "changes in securities") frequently do not fall clearly within the lists of inclusions in, or exclusions from, the meaning of the term "disposition" contained in paragraph 54(c). SUBJECT: INCOME TAX ACT Dispositions - Changes in Terms of Securitiesġ. What the "Archived Content" notice means for interpretation bulletins ![]()
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