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Technology Stocks : 3Com Corporation (COMS)
COMS 0.001300.0%Dec 18 4:00 PM EST
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To: The Phoenix who wrote (38948)2/4/2000 7:10:00 PM
From: Alski  Read Replies (1) of 45548
 
Gary,
...spinoff and must not have been acquired, within that period, in a wholly or even partially taxable transaction.

<COMS acquisition of PALM via USRX already breaks this rule but he goes on to say that COMS would get favorable tax treatment anyway. I don't see how... this is an AND not an OR.>

Did you skip a paragraph?
... a 2000 spinoff of Palm should pass muster because 3Com's acquisition of U.S. Robotics was fully tax-free. This means that 3Com acquired Palm Computing in a manner permitted by the statute and so not constrained by the five-year waiting period.

<It doesn't mean that COMS can sell or seek a suitor or even announce that they've been bought starting the day after spin off.>

Well, OK; but the jest of the article was that such an acquisition could not then be considered a pooling-of-interests and would therefor not qualify for favorable tax treatment. A big tax bite would substantially increase the acquisition cost and be a deterrent to such a non-pooling-of-interests transaction.
The pooling rules provide that such treatment is unavailable in cases where...
Therefore, a potential acquirer of 3Com may feel less than secure about its ability to annex the latter in a pooling until at least two years have passed from the time the spinoff is completed.

FWIW...Alski
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