Ralph,
I think that the tax grossup is only considered at the corporate level. Clearly, we as the LTW holders benefit from it directly, by increasing our net gain. However, I think that madclown is correct.
If we get our payment in cash, then it will most likely be treated as an income distribution like a dividend. At least, that's always been my working assumption.
Philip makes an excellent point that the payment is effectively a "return of capital" instead of a return on capital.
Like Madclown stated, we probably need to consult the IRS on this issue specifically.
If we are given securities, however, then I think we'll just need to deal with the capital gains. Of course, that opens up the topic of cost basis. Is the original cost basis the point of our award, or is it our initial purchase of the LTWs way back when?
I guess it's never easy and I look forward to when this board is just debating how our payment will be treated, instead of whether or not we will get any payment! That will be a welcome debate!
Best,
Jared
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