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Thread: Question about the Liberty Deal.....

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    relmor2003 is offline
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    Question about the Liberty Deal.....

    I am asking for all opinions that have a moment to answer.
    Here is my question.
    If change of ownership negates substantially the tax loss, how is Liberty going to avoid this upon activation of its common shares. or did the preffered share purchase already constitute a change of ownership? Or is one change of ownership considered by the IRS tax code (damaging, or a non factor, but a second one is....). I know the poision pill is set at 4.9 percent to trigger, meaning even an ownership purchase of up to 5 percent of the common would harm the tax loss status. Isnt 40 percent much worse?

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    imromo24 is offline
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    I remember reading that the second change of ownership is the "doozy" something like liberty being the first change of ownership drops the NOL to 80% the second would drop it much lower...don't quote me, but it seems this was the case from what i read...

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    JohnnyIrishXM is offline
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    The liberty deal was not a change in ownership,this is why it was set up to be preffered at convert to 40% and they can only aquire 9.9% more or it triggers ownership change..the poison pill was designed to keep someone else from coming in and if they purchase 10.1% of common issued shares as it now stands,then in effect it is an ownership change..this is why it is set at 5% to trigger it.The first ownership change was the merger,which knocked it down to 80% IRS NOL take...any other ownership change in less than 3 years knocks it down to i think 23% NOL IRS deduction..JMHO

    P.S.5% of stock I believe entitles them to a seat on the board and with Malone's 6 seats constitutes change of ownership in IRS eyes..Could be wrong,but know it is reason why Funds don't go over 5% in shares held,plus you have to register it with SEC..
    Last edited by JohnnyIrishXM; 05-09-2009 at 06:52 PM.

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    relmor2003 is offline
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    Quote Originally Posted by JohnnyIrishXM View Post
    The liberty deal was not a change in ownership,this is why it was set up to be preffered at convert to 40% and they can only aquire 9.9% more or it triggers ownership change..the poison pill was designed to keep someone else from coming in and if they purchase 10.1% of common issued shares as it now stands,then in effect it is an ownership change..this is why it is set at 5% to trigger it.The first ownership change was the merger,which knocked it down to 80% IRS NOL take...any other ownership change in less than 3 years knocks it down to i think 23% NOL IRS deduction..JMHO
    So the IRS reads an ownership change as anyone buying 5 percent of the common of a company. Whether its 5 percent or 40 percent, it doesnt matter.
    ok thanks. I get that now. So it went from 100 percent, they merged, it went to 80 percent, and now they must wait 3 years. So after 3 years, does it reset to 100 percent, stay at 80, or would a ownership change after 3 years drop the percentage regarless, just less if you wait 3 years. Meaning if you do it in 1 year, it drops to 23 percent. If you do it after 3 years, it was at 80 percent, but now since you waited 3 years, its only going to drop to lets say...70 percent. Is this right?

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    JohnnyIrishXM is offline
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    Quote Originally Posted by relmor2003 View Post
    So the IRS reads an ownership change as anyone buying 5 percent of the common of a company. Whether its 5 percent or 40 percent, it doesnt matter.
    ok thanks. I get that now. So it went from 100 percent, they merged, it went to 80 percent, and now they must wait 3 years. So after 3 years, does it reset to 100 percent, stay at 80, or would a ownership change after 3 years drop the percentage regarless, just less if you wait 3 years. Meaning if you do it in 1 year, it drops to 23 percent. If you do it after 3 years, it was at 80 percent, but now since you waited 3 years, its only going to drop to lets say...70 percent. Is this right?
    No,it's not the 5% that does it,it would be Liberty's 40% now plus 10.1% of either a person or 1 company that constitutes ownership change.The 5% is the figure of the poison pill,because it is an early warning alarm for the company because whoever is aquiring 5% has to register with SEC and the company knows about it before they get 10% aquired and it triggers poison pill..but just the fact that it is there,no one will try it with all the dilution.

    Not a tax expert,but i believe after 3 years it goes back to 100% of NOL.
    Saw it talked about in WSJ article in March in detail..i think homer posted it in one of the threads here.

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    relmor2003 is offline
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    Quote Originally Posted by JohnnyIrishXM View Post
    No,it's not the 5% that does it,it would be Liberty's 40% now plus 10.1% of either a person or 1 company that constitutes ownership change.The 5% is the figure of the poison pill,because it is an early warning alarm for the company because whoever is aquiring 5% has to register with SEC and the company knows about it before they get 10% aquired and it triggers poison pill..but just the fact that it is there,no one will try it with all the dilution.

    Not a tax expert,but i believe after 3 years it goes back to 100% of NOL.
    Saw it talked about in WSJ article in March in detail..i think homer posted it in one of the threads here.
    Ok. Let me make this simple for my stupid brain....
    Before Liberty converts their shares how many shares would they have to buy, not percentage wise, but actual shares, to constitute not a 5 percent poison pill activation, and warning, but where the IRS then constitutes it an ownership change. I would also interpret this to mean then that Liberty simply is keeping anyone from acquireing 10.1 percent of the company, trigger an ownership change, take the tax loss back down to 23 percent. And then what. Does it go back to 100 percent again after 3 more years?

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    JohnnyIrishXM is offline
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    JohnnyIrishXM is offline
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    Quote Originally Posted by relmor2003 View Post
    Ok. Let me make this simple for my stupid brain....
    Before Liberty converts their shares how many shares would they have to buy, not percentage wise, but actual shares, to constitute not a 5 percent poison pill activation, and warning, but where the IRS then constitutes it an ownership change. I would also interpret this to mean then that Liberty simply is keeping anyone from acquireing 10.1 percent of the company, trigger an ownership change, take the tax loss back down to 23 percent. And then what. Does it go back to 100 percent again after 3 more years?
    Liberty is EXCLUDED from poison pill,short answer..

    No,second ownership change is permanent in 23%NOL going forward,no matter what then happens with Siriusxm..it is gone forever on second ownership in side 3 years

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    relmor2003 is offline
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    Quote Originally Posted by JohnnyIrishXM View Post
    Liberty is EXCLUDED from poison pill,short answer..

    No,second ownership change is permanent in 23%NOL going forward,no matter what then happens with Siriusxm..it is gone forever on second ownership in side 3 years
    Thank you very much. You rock.

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    JohnnyIrishXM is offline
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    Noproblem, glad to help..

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