Serious Stuff:
(1) COMS is obtaining a private letter ruling from the IRS that the distribution will be non-taxable to COMS shareholders, and that the transaction qualifies as a re-organization for US federal income tax purposes. The IRS letter ruling is a formality (same for HWP/A and others I've checked), but is necessary for the distribution to be tax free to shareholders. PALM has re-incorporated in Delaware, and was supposed to formally separate from 3-Com "on or around 2/26/00" pursuant to the separation agreement between 3-Com and Palm to receive the "re-organization" treatment. I haven't checked to see if that in fact has occurred, but since the separation agreement was a "condition precedent" for the IPO to take place, I assume it has.
(2) For tax purposes, the date you purchased COMS will be the date you will be assumed to have purchased PALM. So buy COMS now, hold until 2/28/01, LT gains tax applies. If you buy and hold COMS through distribution, your basis in COMS will be divided between the COMS/PALM shares you wind up with in some ratio to be decided later, but which will probably be based on the closing prices of COMS and PALM the day before D-Day.
Interesting stuff, particularly if you're holding COMS in a taxable account, and especially if PALM appreciates significantly over the next 6 months. Then the delta between LT and ST gains could be rather large.
David T. |
