Biotech Values

[Rocky3]

Any ENTA long rooting for a buyout should be hoping it happens later rather than sooner because a deal would likely be for cash rather than stock and the tax hit on a near-term deal (taxed at ordinary-income rates) would be punitive. (Also see the bottom of #msg-94843381 re the ObamaCare surcharge on investment income and capital gains.)

Those who own ENTA mostly in an IRA or who have sizable tax-loss carryforwards may ignore the above and root for a near-term buyout, LOL.

Just to clarify the tax rate issues. Rates are much higher this year with the surcharge on investment income for high income tax taxpayers. But for those of us in high income states, the changes are not as high as the nominal rate increases for short-term gains would indicate.

Why? The wonderful world of the alternative minimum tax (AMT). So for those high income individuals in NY, CA, MA, OH, etc who have real estate tax deductions as well as state income tax deductions, the AMT structure will control and limit the marginal tax rate to 28% (plus 3.8% surcharge) - still higher than the 20% long term capital gains rate, but much lower than the nominal top rate plus the various other adjustments (phase out of deductions and exemptions). Of course the state income tax is a full tax since there is no benefit on the federal return.

The other tax avoidance vehicle not mentioned so far is the Roth 401(K)/IRA - no income tax on gains - ever. Not many of us have them, but they are the best, if you are willing to pay the tax on the way into the account.

Way off topic, but in the interest of clasification